10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended: June 30, 2011

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from                      to                         .

Commission File Number: 001-34624

Umpqua Holdings Corporation

(Exact Name of Registrant as Specified in Its Charter)

OREGON	93-1261319
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

One SW Columbia Street, Suite 1200

Portland, Oregon 97258

(Address of Principal Executive Offices)(Zip Code)

(503) 727-4100

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x  Yes     ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x  Yes     ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

x  Large accelerated filer            ¨  Accelerated filer            ¨  Non-accelerated filer            ¨  Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨  Yes     x  No

Indicate the number of shares outstanding for each of the issuer’s classes of common stock, as of the latest practical date:

Common stock, no par value: 114,538,506 shares outstanding as of July 29, 2011

UMPQUA HOLDINGS CORPORATION

FORM 10-Q

Table of Contents

PART I. FINANCIAL INFORMATION		3
Item 1.	Financial Statements (unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	55
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	88
Item 4.	Controls and Procedures	88
PART II. OTHER INFORMATION		89
Item 1.	Legal Proceedings	89
Item 1A.	Risk Factors	89
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	89
Item 3.	Defaults Upon Senior Securities	89
Item 4.	(Removed and Reserved)	90
Item 5.	Other Information	90
Item 6.	Exhibits	90
SIGNATURES		91
EXHIBIT INDEX		92

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except shares)

	June 30, 2011		December 31, 2010
ASSETS
Cash and due from banks	$	137,033	$	111,946
Interest bearing deposits		478,221		891,634
Temporary investments		628		545
Total cash and cash equivalents		615,882		1,004,125
Investment securities
Trading, at fair value		2,522		3,024
Available for sale, at fair value		3,177,460		2,919,180
Held to maturity, at amortized cost		5,553		4,762
Loans held for sale		60,416		75,626
Non-covered loans and leases		5,735,553		5,658,987
Allowance for non-covered loan and lease losses		(97,795)		(101,921)
Net non-covered loans and leases		5,637,758		5,557,066
Covered loans and leases, net of allowance of $10,219 and $2,721		698,676		785,898
Restricted equity securities		32,839		34,475
Premises and equipment, net		145,192		136,599
Goodwill and other intangible assets, net		679,671		681,969
Mortgage servicing rights, at fair value		16,350		14,454
Non-covered other real estate owned		34,409		32,791
Covered other real estate owned		30,153		29,863
FDIC indemnification asset		116,928		146,413
Other assets		205,883		242,465
Total assets	$	11,459,692	$	11,668,710
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Noninterest bearing	$	1,733,640	$	1,616,687
Interest bearing		7,412,772		7,817,118
Total deposits		9,146,412		9,433,805
Securities sold under agreements to repurchase		120,889		73,759
Term debt		256,719		262,760
Junior subordinated debentures, at fair value		81,766		80,688
Junior subordinated debentures, at amortized cost		102,705		102,866
Other liabilities		76,880		72,258
Total liabilities		9,785,371		10,026,136
COMMITMENTS AND CONTINGENCIES (NOTE 10)
SHAREHOLDERS’ EQUITY
Common stock, no par value, 200,000,000 shares authorized; issued and outstanding: 114,537,782 in 2011 and 114,536,814 in 2010		1,540,933		1,540,928
Retained earnings		96,434		76,701
Accumulated other comprehensive income		36,954		24,945
Total shareholders’ equity		1,674,321		1,642,574
Total liabilities and shareholders’ equity	$	11,459,692	$	11,668,710

See notes to condensed consolidated financial statements

3

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
INTEREST INCOME
Interest and fees on loans	$	101,547	$	97,240	$	201,827	$	187,948
Interest and dividends on investment securities
Taxable		24,348		15,569		46,391		31,644
Exempt from federal income tax		2,178		2,247		4,343		4,434
Dividends		4		3		7		3
Interest on temporary investments and interest bearing deposits		340		545		741		944
Total interest income		128,417		115,604		253,309		224,973
INTEREST EXPENSE
Interest on deposits		14,698		18,463		30,364		37,252
Interest on securities sold under agreement to repurchase and federal funds purchased		131		123		253		246
Interest on term debt		2,301		2,779		4,590		4,299
Interest on junior subordinated debentures		1,926		1,939		3,839		3,824
Total interest expense		19,056		23,304		39,046		45,621
Net interest income		109,361		92,300		214,263		179,352
PROVISION FOR NON-COVERED LOAN AND LEASE LOSSES		15,459		29,767		30,489		71,873
PROVISION FOR COVERED LOAN AND LEASE LOSSES		3,755		-		11,023		-
Net interest income after provision for loan and lease losses		90,147		62,533		172,751		107,479
NON-INTEREST INCOME
Service charges on deposit accounts		8,540		9,585		16,361		17,950
Brokerage commissions and fees		3,276		3,139		6,653		5,778
Mortgage banking revenue, net		4,807		3,209		10,082		6,687
Gain (loss) on investment securities, net
Gain on sale of investment securities, net		5,678		-		5,678		1
Total other-than-temporary impairment losses		(110)		-		(110)		(5)
Portion of other-than-temporary impairment losses transferred from		-
other comprehensive income		63		-		38		(284)
Total gain (loss) on investment securities, net		5,631		-		5,606		(288)
(Loss) gain on junior subordinated debentures carried at fair value		(547)		-		(1,089)		6,088
Bargain purchase gain on acquisition		-		-		-		6,437
Change in FDIC indemnification asset		(5,551)		263		(2,646)		873
Other income		3,471		2,367		6,245		5,085
Total non-interest income		19,627		18,563		41,212		48,610
NON-INTEREST EXPENSE
Salaries and employee benefits		43,808		39,604		88,418		75,844
Net occupancy and equipment		12,547		11,472		25,064		22,148
Communications		2,796		2,596		5,606		4,820
Marketing		1,798		1,714		2,649		2,723
Services		6,026		5,831		11,908		10,746
Supplies		843		1,003		1,624		1,729
FDIC assessments		2,821		3,555		6,694		6,999
Net loss (gain) on other real estate owned		3,917		(952)		7,701		1,359
Intangible amortization		1,251		1,368		2,502		2,676
Merger related expenses		71		2,169		252		4,075
Other expenses		7,329		6,473		14,990		11,585
Total non-interest expense		83,207		74,833		167,408		144,704
Income before provision for income taxes		26,567		6,263		46,555		11,385
Provision for (benefit from) income taxes		8,782		2,800		15,303		(592)
Net income	$	17,785	$	3,463	$	31,252	$	11,977

4

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

(UNAUDITED)

(in thousands, except per share amounts)

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Net income	$	17,785	$	3,463	$	31,252		11,977
Preferred stock dividends		-		-		-		12,192
Dividends and undistributed earnings allocated to participating securities		86		16		148		31
Net earnings (loss) available to common shareholders	$	17,699	$	3,447	$	31,104	$	(246)
Earnings (loss) per common share:
Basic	$	0.15	$	0.03	$	0.27	$	-
Diluted	$	0.15	$	0.03	$	0.27	$	-
Weighted average number of common shares outstanding:
Basic		114,611		110,135		114,593		101,205
Diluted		114,785		114,733		114,796		101,435

See notes to condensed consolidated financial statements

5

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except shares)

	Preferred Stock		Common Stock				Retained Earnings		Accumulated Other Comprehensive (Loss) Income			Total
			Shares		Amount
BALANCE AT JANUARY 1, 2010	$	204,335		86,785,588	$	1,253,288	$	83,939	$	24,955		$	1,566,517
Net income								28,326					28,326
Other comprehensive loss, net of tax										(10	)		(10)
Comprehensive income												$	28,316
Issuance of common stock				8,625,000		89,786							89,786
Stock-based compensation						3,505							3,505
Stock repurchased and retired				(22,541)		(284)							(284)
Issuances of common stock under stock plans and related net tax benefit				173,767		844							844
Redemption of preferred stock issued to U.S. Treasury		(214,181)											(214,181)
Issuance of preferred stock		198,289											198,289
Conversion of preferred stock to common stock		(198,289)		18,975,000		198,289							-
Amortization of discount on preferred stock		9,846						(9,846)					-
Dividends declared on preferred stock								(3,686)					(3,686)
Repurchase of warrants issued to U.S. Treasury						(4,500)							(4,500)
Cash dividends on common stock ($0.20 per share)								(22,032)					(22,032)
Balance at December 31, 2010	$	-		114,536,814	$	1,540,928	$	76,701	$	24,945		$	1,642,574
BALANCE AT JANUARY 1, 2011	$	-		114,536,814	$	1,540,928	$	76,701	$	24,945		$	1,642,574
Net income								31,252					31,252
Other comprehensive income, net of tax										12,009			12,009
Comprehensive income												$	43,261
Stock-based compensation						1,987							1,987
Stock repurchased and retired				(170,205)		(1,960)							(1,960)
Issuances of common stock under stock plans and related net tax deficiencies				171,173		(22)							(22)
Cash dividends on common stock ($0.10 per share)								(11,519)					(11,519)
Balance at June 30, 2011	$	-		114,537,782	$	1,540,933	$	96,434	$	36,954		$	1,674,321

See notes to condensed consolidated financial statements

6

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands)

	Three months ended June 30,				Six months ended June  30,
	2011		2010		2011		2010
Net income	$	17,785	$	3,463	$	31,252	$	11,977
Available for sale securities:
Unrealized gains arising during the period		24,835		14,249		25,649		28,094
Reclassification adjustment for net gains realized in earnings (net of tax expense of $2,271 for the three months ended June 30, 2011 and net of tax expense of $2,271 and $1 for the six months ended June 30, 2011 and 2010, respectively)		(3,407)		-		(3,407)		(1)
Income tax expense related to unrealized gains		(9,934)		(5,699)		(10,259)		(11,238)
Net change in unrealized gains		11,494		8,550		11,983		16,855
Held to maturity securities:
Unrealized (losses) gains related to factors other than credit (net of tax benefit of $35 and $30 for the three and six months ended June 30, 2011, respectively, and tax expense of $69 for the six months ended June 30, 2010)		(53)		-		(45)		103
Reclassification adjustment for impairments realized in net income (net of tax benefit of $10 for the three months ended June 30, 2011, and net of tax benefit of $20 and $116 for the six months ended June 30, 2011 and 2010, respectively)		15		-		30		173
Accretion of unrealized losses related to factors other than credit to investment securities held to maturity (net of tax benefit of $10 and $34 for the three months ended June 30, 2011 and 2010, respectively, and net of tax benefit of $27 and $74 for the six months ended June 30, 2011 and 2010, respectively)		15		50		41		112
Net change in unrealized losses related to factors other than credit		(23)		50		26		388
Other comprehensive income, net of tax		11,471		8,600		12,009		17,243
Comprehensive income	$	29,256	$	12,063	$	43,261	$	29,220

See notes to condensed consolidated financial statements

7

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Six months ended June 30,
	2011		2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	31,252	$	11,977
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of investment premiums, net		16,389		7,196
Gain on sale of investment securities, net		(5,678)		(1)
Other-than-temporary impairment on investment securities held to maturity		72		289
Loss on sale of non-covered other real estate owned		1,160		1,156
Gain on sale of covered other real estate owned		(898)		(1,519)
Valuation adjustment on non-covered other real estate owned		5,518		1,721
Valuation adjustment on covered other real estate owned		1,921		5
Provision for non-covered loan and lease losses		30,489		71,873
Provision for covered loan and lease losses		11,023		-
Bargain purchase gain on acquisition		-		(6,437)
Change in FDIC indemnification asset		2,646		(873)
Depreciation, amortization and accretion		6,218		7,186
Increase in mortgage servicing rights		(2,407)		(2,008)
Change in mortgage servicing rights carried at fair value		511		1,800
Change in junior subordinated debentures carried at fair value		1,078		(6,076)
Stock-based compensation		1,987		1,425
Net decrease in trading account assets		502		530
Gain on sale of loans		(1,819)		(3,441)
Origination of loans held for sale		(290,058)		(248,744)
Proceeds from sales of loans held for sale		307,087		245,788
Excess tax benefits from the exercise of stock options		(4)		(56)
Change in other assets and liabilities:
Net decrease in other assets		5,954		15,369
Net increase in other liabilities		4,759		27,810
Net cash provided by operating activities		127,680		124,970
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities available for sale		(690,720)		(197,709)
Purchases of investment securities held to maturity		(1,573)		-
Proceeds from investment securities available for sale		441,721		133,573
Proceeds from investment securities held to maturity		757		883
Redemption of restricted equity securities		1,636		92
Net non-covered loan and lease (originations) paydowns		(136,582)		169,418
Net covered loan and lease paydowns		63,417		49,379
Proceeds from sales of loans		6,777		21,009
Proceeds from disposals of furniture and equipment		180		1,096
Purchases of premises and equipment		(16,877)		(33,687)
Net proceeds from FDIC indemnification asset		48,850		6,764
Proceeds from sales of non-covered other real estate owned		17,026		13,931
Proceeds from sales of covered other real estate owned		7,355		2,832
Proceeds from sale of acquired insurance portfolio		-		5,150
Cash acquired in merger, net of cash consideration paid		-		179,046
Net cash (used) provided by investing activities		(258,033)		351,777

8

UMPQUA HOLDINGS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(UNAUDITED)

(in thousands)

	Six months ended June 30,
	2011		2010
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in deposit liabilities		(286,867)		(29,686)
Net increase (decrease) in securities sold under agreements to repurchase		47,130		(465)
Repayment of term debt		(5,000)		(138,719)
Redemption of preferred stock		-		(214,181)
Proceeds from issuance of preferred stock		-		198,289
Net proceeds from issuance of common stock		-		89,786
Redemption of warrants		-		(4,500)
Dividends paid on preferred stock		-		(3,682)
Dividends paid on common stock		(11,506)		(9,137)
Excess tax benefits from stock based compensation		4		56
Proceeds from stock options exercised		309		918
Retirement of common stock		(1,960)		(259)
Net cash used by financing activities		(257,890)		(111,580)
Net (decrease) increase in cash and cash equivalents		(388,243)		365,167
Cash and cash equivalents, beginning of period		1,004,125		605,413
Cash and cash equivalents, end of period	$	615,882	$	970,580
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	41,302	$	46,373
Income taxes	$	6,850	$	150
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Change in unrealized gains on investment securities available for sale, net of taxes	$	11,983	$	16,855
Change in unrealized losses on investment securities held to maturity related to factors other than credit, net of taxes	$	26	$	388
Cash dividend declared on common and preferred stock and payable after period-end	$	5,754	$	5,743
Transfer of non-covered loans to non-covered other real estate owned	$	25,322	$	17,895
Transfer of covered loans to covered other real estate owned	$	8,668	$	2,669
Transfer from FDIC indemnification asset to due from FDIC and other	$	26,839	$	23,037
Transfer of covered loans to non-covered loans	$	4,114	$	-
Conversion of preferred stock to common stock			$	198,289
Acquisitions:
Assets acquired	$	-	$	1,512,048
Liabilities assumed	$	-	$	1,505,611

See notes to condensed consolidated financial statements

9

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 – Summary of Significant Accounting Policies

Basis of Financial Statement Presentation

The accounting and financial reporting policies of Umpqua Holdings Corporation (referred to in this report as “we”, “our” or “the Company”) conform to accounting principles generally accepted in the United States of America. The accompanying interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Umpqua Bank (“Bank”), and Umpqua Investments, Inc. (“Umpqua Investments”). All material inter-company balances and transactions have been eliminated. The consolidated financial statements have not been audited. In preparing these financial statements, the Company has evaluated events and transactions subsequent to June 30, 2011 for potential recognition or disclosure. A more detailed description of our accounting policies is included in the 2010 Annual Report filed on Form 10-K. These interim condensed consolidated financial statements should be read in conjunction with the financial statements and related notes contained in the 2010 Annual Report filed on Form 10-K.

In management’s opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments include normal and recurring accruals considered necessary for a fair and accurate presentation. The results for interim periods are not necessarily indicative of results for the full year or any other interim period. Certain reclassifications of prior period amounts have been made to conform to current classifications.

Note 2 – Business Combinations

On January 22, 2010, the Washington Department of Financial Institutions closed EvergreenBank (“Evergreen”), Seattle, Washington and appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. That same date, Umpqua Bank assumed the banking operations of Evergreen from the FDIC under a whole bank purchase and assumption agreement with loss-sharing. Under the terms of the loss-sharing agreement, the FDIC will cover a substantial portion of any future losses on loans, related unfunded loan commitments, other real estate owned (“OREO”) and accrued interest on loans for up to 90 days. The FDIC will absorb 80% of losses and share in 80% of loss recoveries on the first $90.0 million on covered assets for Evergreen and absorb 95% of losses and share in 95% of loss recoveries exceeding $90.0 million, except the Bank will incur losses up to $30.2 million before the loss-sharing commences. The loss-sharing arrangements for non-single family residential and single family residential loans are in effect for 5 years and 10 years, respectively, and the loss recovery provisions are in effect for 8 years and 10 years, respectively, from the acquisition date. With this agreement, Umpqua Bank assumed six additional store locations in the greater Seattle, Washington market. This acquisition is consistent with our community banking expansion strategy and provides further opportunity to fill in our market presence in the greater Seattle, Washington market.

On February 26, 2010, the Washington Department of Financial Institutions closed Rainier Pacific Bank (“Rainier”), Tacoma, Washington and appointed the FDIC as receiver. That same date, Umpqua Bank assumed the banking operations of Rainier from the FDIC under a whole bank purchase and assumption agreement with loss-sharing. Under the terms of the loss-sharing agreement, the FDIC will cover a substantial portion of any future losses on loans, related unfunded loan commitments, OREO and accrued interest on loans for up to 90 days. The FDIC will absorb 80% of losses and share in 80% of loss recoveries on the first $95.0 million of losses on covered assets and absorb 95% of losses and share in 95% of loss recoveries exceeding $95.0 million. The loss-sharing arrangements for non-single family residential and single family residential loans are in effect for 5 years and 10 years, respectively, and the loss recovery provisions are in effect for 8 years and 10 years, respectively, from the acquisition dates. With this agreement, Umpqua Bank assumed 14 additional store locations in Pierce County and surrounding areas. This acquisition expands our presence in the south Puget Sound region of Washington State.

The operations of Evergreen and Rainier are included in our operating results from January 23, 2010 and February 27, 2010, respectively, and added combined revenue of $9.8 million and $24.5 million, non-interest expense of $4.8 million and $9.4 million, and earnings of $1.4 million and $5.4 million, net of tax, for the three and six months ended June 30, 2011, and added combined revenue of $10.4 million and $22.8 million, non-interest expense of $6.6 million and $11.3 million, and earnings of $2.5 million and $7.6 million, net of tax, for the three and six months ended June 30, 2010, respectively. These operating results include a bargain purchase gain of $6.4 million, which is not indicative of future operating results. Evergreen’s and Rainiers’s results of operations prior to the acquisition are not included in our operating results. Merger-related expenses of $52,000 and $102,000 for the three and six months ended June 30, 2011, respectively, and $1.6 million and $3.3 million for the three and six months ended June 30, 2010, respectively, have been incurred in connection with these acquisitions and recognized in a separate line item on the Condensed Consolidated Statements of Operations.

On June 18, 2010, the Nevada State Financial Institutions Division closed Nevada Security Bank (“Nevada Security”), Reno, Nevada and appointed the FDIC as receiver. That same date, Umpqua Bank assumed the banking operations of Nevada Security from the FDIC under a whole bank purchase and assumption agreement with loss-sharing. Under the terms of the loss-sharing agreement, the FDIC will cover a substantial portion of any future losses on loans, related unfunded loan commitments, OREO, and accrued interest

10

on loans for up to 90 days. The FDIC will absorb 80% of losses and share in 80% of loss recoveries on all covered assets. The loss-sharing arrangements for non-single family residential and single family residential loans are in effect for 5 years and 10 years, respectively, and the loss recovery provisions are in effect for 8 years and 10 years, respectively, from the acquisition dates. With this agreement, Umpqua Bank assumed five additional store locations, including three in Reno, Nevada, one in Incline Village, Nevada, and one in Roseville, California. This acquisition expands our presence into the State of Nevada.

The operations of Nevada Security are included in our operating results from June 19, 2010, and added revenue of $2.8 million and $9.4 million, non-interest expense of $2.6 million and $6.1 million, and loss of $532,000 and $627,000, net of tax, for the three and six months ended, June 30, 2011 and revenue of $529,000, non-interest expense of $582,000, and loss of $34,000, net of tax, for the three and six months ended, June 30, 2010, respectively. Nevada Security’s results of operations prior to the acquisition are not included in our operating results. Merger-related expenses of $12,000 and $23,000 for the three and six months ended June 30, 2011, respectively, and $402,000 for the three and six months ended June 30, 2010, respectively, have been incurred in connection with the acquisition of Nevada Security and recognized as a separate line item on the Condensed Consolidated Statements of Operations.

We refer to the acquired loans and other real estate owned that are subject to the loss-sharing agreements as “covered loans” and “covered other real estate owned”, respectively, and these are presented as separate line items in our consolidated balance sheet. Collectively these balances are referred to as “covered assets.” Certain types of modifications or restructuring activities subsequent to acquisition may disqualify a loan from loss-share coverage under the provisions of the loss-share agreement. Loans that have been disqualified from loss-share coverage are prospectively reported as non-covered loans.

The assets acquired and liabilities assumed from the Evergreen, Rainier, and Nevada Security acquisitions have been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the acquisition dates. The fair values of the assets acquired and liabilities assumed were determined based on the requirements of the Fair Value Measurements and Disclosures topic of the Financial Accounting Standards Board Accounting Standards Codification (the “FASB ASC”). The amounts are subject to adjustments based upon final settlement with the FDIC. In addition, the tax treatment of FDIC-assisted acquisitions is complex and subject to interpretations that may result in future adjustments of deferred taxes as of the acquisition date. The terms of the agreements provide for the FDIC to indemnify the Bank against claims with respect to liabilities of Evergreen, Rainier, and Nevada Security not assumed by the Bank and certain other types of claims identified in the agreement. The application of the acquisition method of accounting resulted in the recognition of a bargain purchase gain of $6.4 million in the Evergreen acquisition, $35.8 million of goodwill in the Rainier acquisition and $10.4 million of goodwill in the Nevada Security acquisition.

A summary of the net assets (liabilities) received from the FDIC and the estimated fair value adjustments are presented below:

(in thousands)

	Evergreen		Rainier		Nevada Security
	January 22, 2010		February 26, 2010		June 18, 2010
Cost basis net assets (liabilities)	$	58,811	$	(50,295)	$	53,629
Cash payment received from (paid to) the FDIC		-		59,351		(29,950)
Fair value adjustments:
Loans		(117,449)		(103,137)		(112,975)
Other real estate owned		(2,422)		(6,581)		(17,939)
Other intangible assets		440		6,253		322
FDIC indemnification asset		71,755		76,603		99,160
Deposits		(1,023)		(1,828)		(1,950)
Term debt		(2,496)		(13,035)		-
Other		(1,179)		(3,139)		(690)
Bargain purchase gain (goodwill)	$	6,437	$	(35,808)	$	(10,393)

In FDIC-assisted transactions, only certain assets and liabilities are transferred to the acquirer and, depending on the nature and amount of the acquirer’s bid, the FDIC may be required to make a cash payment to the acquirer or the acquirer may be required to make payment to the FDIC.

In the Evergreen acquisition, cost basis net assets of $58.8 million were transferred to the Company. The bargain purchase gain represents the excess of the estimated fair value of the assets acquired over the estimated fair value of the liabilities assumed.

In the Rainier acquisition, cost basis net liabilities of $50.3 million and a cash payment received from the FDIC of $59.4 million were transferred to the Company. The goodwill represents the excess of the estimated fair value of the liabilities assumed over the estimated fair value of the assets acquired. Goodwill of $27.5 million and core deposit intangible assets of $1.1 million recognized are deductible for income tax purposes.

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In the Nevada Security acquisition, cost basis net assets of $53.6 million were transferred to the Company and a cash payment of $30.0 million was made to the FDIC. The goodwill represents the excess of the estimated fair value of the liabilities assumed over the estimated fair value of the assets acquired. Goodwill of $36.5 million and core deposit intangible assets of $322,000 recognized are deductible for income tax purposes.

The Bank did not immediately acquire all the real estate, banking facilities, furniture or equipment of Evergreen, Rainier, or Nevada Security as part of the purchase and assumption agreements. Rather, the Bank was granted the option to purchase or lease the real estate and furniture and equipment from the FDIC. The term of this option expired 90 days from the acquisition dates, unless extended by the FDIC. Acquisition costs of the real estate and furniture and equipment are based on current mutually agreed upon appraisals. Umpqua exercised the right to purchase approximately $344,000 of furniture and equipment for Evergreen, $26.3 million of real estate and furniture and equipment for Rainier, and $2.0 million of real estate and furniture and equipment for Nevada Security. The Bank had the option to purchase one store location as part of the Nevada Security acquisition and purchased it in the second quarter of 2011.

The statement of assets acquired and liabilities assumed at their estimated fair values of Evergreen, Rainier, and Nevada Security are presented below:

(in thousands)

	Evergreen		Rainier		Nevada Security
	January 22, 2010		February 26, 2010		June 18, 2010
Assets Acquired:
Cash and equivalents	$	18,919	$	94,067	$	66,060
Investment securities		3,850		26,478		22,626
Covered loans		252,493		458,340		215,507
Premises and equipment		-		17		50
Restricted equity securities		3,073		13,712		2,951
Goodwill		-		35,808		10,393
Other intangible assets		440		6,253		322
Mortgage servicing rights		-		62		-
Covered other real estate owned		2,421		6,580		17,938
FDIC indemnification asset		71,755		76,603		99,160
Other assets		328		3,254		2,588
Total assets acquired	$	353,279	$	721,174	$	437,595
Liabilities Assumed:
Deposits	$	285,775	$	425,771	$	437,299
Term debt		60,813		293,191		-
Other liabilities		254		2,212		296
Total liabilities assumed		346,842		721,174		437,595
Net assets acquired/bargain purchase gain	$	6,437	$	-	$	-

Rainier’s assets and liabilities were significant at a level to require disclosure of one year of historical financial statements and related pro forma financial disclosure. However, given the pervasive nature of the loss-sharing agreement entered into with the FDIC, the historical information of Rainier is much less relevant for purposes of assessing the future operations of the combined entity. In addition, prior to closure Rainier had not completed an audit of their financial statements, and we determined that audited financial statements were not and would not be reasonably available for the year ended December 31, 2009. Given these considerations, the Company requested, and received, relief from the Securities and Exchange Commission from submitting certain financial information of Rainier. The assets and liabilities of Evergreen and Nevada Security were not at a level that requires disclosure of historical or pro forma financial information.

Note 3 – Investment Securities

The following table presents the amortized costs, unrealized gains, unrealized losses and approximate fair values of investment securities at June 30, 2011 and December 31, 2010:

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June 30, 2011

(in thousands)

	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
AVAILABLE FOR SALE:
U.S. Treasury and agencies	$	117,392	$	1,561	$	-	$	118,953
Obligations of states and political subdivisions		213,053		10,072		(227)		222,898
Residential mortgage-backed securities and collateralized mortgage obligations		2,782,517		54,657		(3,745)		2,833,429
Other debt securities		152		-		(2)		150
Investments in mutual funds and other equity securities		1,959		71		-		2,030
	$	3,115,073	$	66,361	$	(3,974)	$	3,177,460
HELD TO MATURITY:
Obligations of states and political subdivisions	$	1,945	$	3	$	-	$	1,948
Residential mortgage-backed securities and collateralized mortgage obligations		3,608		202		(25)		3,785
	$	5,553	$	205	$	(25)	$	5,733

December 31, 2010

(in thousands)

	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
AVAILABLE FOR SALE:
U.S. Treasury and agencies	$	117,551	$	1,239	$	(1)	$	118,789
Obligations of states and political subdivisions		213,129		4,985		(1,388)		216,726
Residential mortgage-backed securities and collateralized mortgage obligations		2,543,974		57,506		(19,976)		2,581,504
Other debt securities		152		-		-		152
Investments in mutual funds and other equity securities		1,959		50				2,009
	$	2,876,765	$	63,780	$	(21,365)	$	2,919,180
HELD TO MATURITY:
Obligations of states and political subdivisions	$	2,370	$	5	$	-	$	2,375
Residential mortgage-backed securities and collateralized mortgage obligations		2,392		216		(209)		2,399
	$	4,762	$	221	$	(209)	$	4,774

Investment securities that were in an unrealized loss position as of June 30, 2011 and December 31, 2010 are presented in the following tables, based on the length of time individual securities have been in an unrealized loss position. In the opinion of management, these securities are considered only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and not due to concerns regarding the underlying credit of the issuers or the underlying collateral.

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(in thousands)

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
AVAILABLE FOR SALE:
Obligations of states and political subdivisions	$	10,716	$	210	$	1,831	$	17	$	12,547	$	227
Residential mortgage-backed securities and collateralized mortgage obligations		709,167		3,727		4,476		18		713,643		3,745
Other debt securities		-		-		150		2		150		2
Total temporarily impaired securities	$	719,883	$	3,937	$	6,457	$	37	$	726,340	$	3,974
HELD TO MATURITY:
Residential mortgage-backed securities and collateralized mortgage obligations	$	-	$	-	$	345	$	25	$	345	$	25
Total temporarily impaired securities	$	-	$	-	$	345	$	25	$	345	$	25

December 31, 2010

(in thousands)

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
AVAILABLE FOR SALE:
U.S. Treasury and agencies	$	-	$	-	$	110	$	1	$	110	$	1
Obligations of states and political subdivisions		60,110		1,366		1,003		22		61,113		1,388
Residential mortgage-backed securities and collateralized mortgage obligations		1,238,483		19,968		1,539		8		1,240,022		19,976
Total temporarily impaired securities	$	1,298,593	$	21,334	$	2,652	$	31	$	1,301,245	$	21,365
HELD TO MATURITY:
Residential mortgage-backed securities and collateralized mortgage obligations	$	-	$	-	$	658	$	209	$	658	$	209
Total temporarily impaired securities	$	-	$	-	$	658	$	209	$	658	$	209

The unrealized losses on obligations of political subdivisions were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities. Management monitors published credit ratings of these securities and no adverse ratings changes have occurred since the date of purchase of obligations of political subdivisions which are in an unrealized loss position as of June 30, 2011. Because the decline in fair value is attributable to changes in interest rates or widening market spreads and not credit quality, and because the Bank does not intend to sell the securities in this class and it is not likely that Bank will be required to sell these securities before recovery of their amortized cost basis, which may include holding each security until maturity, the unrealized losses on these investments are not considered other-than-temporarily impaired.

All of the available for sale residential mortgage-backed securities and collateralized mortgage obligations portfolio in an unrealized loss position at June 30, 2011 are issued or guaranteed by governmental agencies. The unrealized losses on residential mortgage-backed securities and collateralized mortgage obligations were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities, and not concerns regarding the underlying credit of the issuers or the underlying collateral. It is expected that these securities will not be settled at a price less than the amortized cost of each investment. Because the decline in fair value is attributable to changes in interest rates or widening market spreads and not credit quality, and because the Bank does not intend to sell the securities in this class and it is not likely that the Bank will be required to sell these securities before recovery of their amortized cost basis, which may include holding each security until contractual maturity, the unrealized losses on these investments are not considered other-than-temporarily impaired.

We review investment securities on an ongoing basis for the presence of other-than-temporary impairment (“OTTI”) or permanent impairment, taking into consideration current market conditions, fair value in relationship to cost, extent and nature of the change in fair value, issuer rating changes and trends, whether we intend to sell a security or if it is likely that we will be required to sell the security before recovery of our amortized cost basis of the investment, which may be maturity, and other factors. For debt securities, if we intend to sell the security or it is likely that we will be required to sell the security before recovering its cost basis, the entire impairment loss would be recognized in earnings as an OTTI. If we do not intend to sell the security and it is not likely that we will be required to sell the security but we do not expect to recover the entire amortized cost basis of the security, only the portion of the impairment loss representing credit losses would be recognized in earnings. The credit loss on a security is measured as the difference between the amortized cost basis and the present value of the cash flows expected to be collected. Projected cash flows are discounted by the original or current effective interest rate depending on the nature of the security being measured for potential OTTI. The remaining impairment related to all other factors, the difference between the present value of the cash flows expected to be collected and fair value, is recognized as a charge to other comprehensive income (“OCI”). Impairment losses related to all other factors are presented as separate categories within OCI. For investment securities held to maturity, this amount is accreted over the remaining life of the debt security prospectively based on the amount and timing of future estimated cash flows. The accretion of the impairment related to factors other than credit amount recorded in OCI will increase the carrying value of the investment, and would not affect earnings. If there is an indication of additional credit losses the security is re-evaluated accordingly to the procedures described above.

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The following tables present the OTTI losses for the three and six months ended June 30, 2011 and 2010:

(in thousands)

	Three months ended June 30,
	2011		2010
Total other-than-temporary impairment losses	$	110	$	-
Portion of other-than-temporary impairment losses recognized in other comprehensive income (1)		(63)		-
Net impairment losses recognized in earnings (2)	$	47	$	-
		Six months ended June 30,
	2011		2010
Total other-than-temporary impairment losses	$	110	$	5
Portion of other-than-temporary impairment losses (recognized in) transferred from other comprehensive income (1)		(38)		284
Net impairment losses recognized in earnings (2)	$	72	$	289

(1) Represents other-than-temporary impairment losses related to all other factors.

(2) Represents other-than-temporary impairment losses related to credit losses.

The OTTI recognized on investment securities held to maturity relate to non-agency residential collateralized mortgage obligations. Each of these securities holds various levels of credit subordination. The underlying mortgage loans of these securities were originated from 2003 through 2007. At origination, the weighted average loan-to-value of the underlying mortgages was 69%; the underlying borrowers had weighted average FICO scores of 731, and 59% were limited documentation loans. These securities are valued by third-party pricing services using matrix or model pricing methodologies and were corroborated by broker indicative bids. We estimate cash flows of the underlying collateral for each security considering credit, interest and prepayment risk models that incorporate management’s estimate of projected key assumptions including prepayment rates, collateral default rates and loss severity. Assumptions utilized vary from security to security, and are influenced by factors such as loan interest rates, geographic location, borrower characteristics and vintage, and historical experience. We then used a third party to obtain information about the structure of each security, including subordination and other credit enhancements, in order to determine how the underlying collateral cash flows will be distributed to each security issued in the structure. These cash flows are then discounted at the interest rate used to recognize interest income on each security. We review the actual collateral performance of these securities on a quarterly basis and update the inputs as appropriate to determine the projected cash flows. The following table presents a summary of the significant inputs utilized to measure management’s estimate of the credit loss component on these non-agency collateralized mortgage obligations as of June 30, 2011 and 2010:

	2011			2010
	Range		Weighted	Range		Weighted
	Minimum	Maximum	Average	Minimum	Maximum	Average
Constant prepayment rate	5.0%	20.0%	14.4%	4.0%	25.0%	14.9%
Collateral default rate	5.0%	30.0%	13.2%	8.0%	45.0%	16.8%
Loss severity	30.0%	65.0%	39.0%	20.0%	50.0%	34.6%

The following table presents a roll forward of the credit loss component of held to maturity debt securities that have been written down for OTTI with the credit loss component recognized in earnings and the remaining impairment loss related to all other factors recognized in OCI for the three and six months ended June 30, 2011 and 2010:

15

(in thousands)

	Three months ended June 30,
	2011		2010
Balance, beginning of period	$	12,803	$	12,653
Subsequent OTTI credit losses		47		-
Balance, end of period	$	12,850	$	12,653

(in thousands)

	Six months ended June 30,
	2011		2010
Balance, beginning of period	$	12,778	$	12,364
Subsequent OTTI credit losses		72		289
Balance, end of period	$	12,850	$	12,653

The following table presents the maturities of investment securities at June 30, 2011:

(in thousands)

	Available For Sale				Held To Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
AMOUNTS MATURING IN:
Three months or less	$	17,296	$	17,379	$	590	$	591
Over three months through twelve months		287,207		294,045		85		85
After one year through five years		1,992,369		2,037,495		613		618
After five years through ten years		750,874		761,393		49		50
After ten years		65,368		65,118		4,216		4,389
Other investment securities		1,959		2,030		-		-
	$	3,115,073	$	3,177,460	$	5,553	$	5,733

The amortized cost and fair value of collateralized mortgage obligations and mortgage-backed securities are presented by expected average life, rather than contractual maturity, in the preceding table. Expected maturities may differ from contractual maturities because borrowers have the right to prepay underlying loans without prepayment penalties.

The following table presents the gross realized gains and gross realized losses on the sale of securities available for sale for the three and six months ended June 30, 2011 and 2010:

(in thousands)

	Three months ended June 30, 2011				Three months ended June 30, 2010
	Gains		Losses		Gains		Losses
Obligations of states and political subdivisions	$	7	$	-	$	-	$	-
Residential mortgage-backed securities and collateralized mortgage obligations		6,475		804		-		-
	$	6,482	$	804	$	-	$	-
	Six months ended June 30, 2011				Six months ended June 30, 2010
	Gains		Losses		Gains		Losses
Obligations of states and political subdivisions	$	7	$	-	$	2	$	1
Residential mortgage-backed securities and collateralized mortgage obligations		6,475		804		-		-
	$	6,482	$	804	$	2	$	1

The following table presents, as of June 30, 2011, investment securities which were pledged to secure borrowings and public deposits as permitted or required by law:

16

(in thousands)

	Amortized Cost		Fair Value
To Federal Home Loan Bank to secure borrowings	$	226,584	$	237,852
To state and local governments to secure public deposits		599,429		622,425
Other securities pledged		163,987		165,943
Total pledged securities	$	990,000	$	1,026,220

Note 4 – Non-covered Loans and Leases

The following table presents the major types of non-covered loans recorded in the balance sheets as of June 30, 2011 and December 31, 2010:

(in thousands)

	June 30, 2011			December 31, 2010
Commercial real estate
Term & multifamily	$	3,532,134		$	3,483,475
Construction & development		184,707			247,814
Residential development		112,657			147,813
Commercial
Term		572,402			509,453
LOC & other		788,268			747,419
Residential
Mortgage		245,034			222,416
Home equity loans & lines		277,453			278,585
Consumer & other		34,584			33,043
Total		5,747,239			5,670,018
Deferred loan fees, net		(11,686	)		(11,031	)
Total	$	5,735,553		$	5,658,987

As of June 30, 2011, loans totaling $3.5 billion were pledged to secure borrowings and available lines of credit.

Note 5 – Allowance for Non-Covered Loan Loss and Credit Quality

Allowance for Non-Covered Loan and Lease Losses

The Bank has a management Allowance for Loan and Lease Losses (“ALLL”) Committee, which is responsible for, among other things, regularly reviewing the ALLL methodology, including loss factors, and ensuring that it is designed and applied in accordance with generally accepted accounting principles. The ALLL Committee reviews and approves loans and leases recommended for impaired status. The ALLL Committee also approves removing loans and leases from impaired status. The Bank's Audit and Compliance Committee provides board oversight of the ALLL process and reviews and approves the ALLL methodology on a quarterly basis.

Our methodology for assessing the appropriateness of the ALLL consists of three key elements, which include 1) the formula allowance; 2) the specific allowance; and 3) the unallocated allowance. By incorporating these factors into a single allowance requirement analysis, all risk-based activities within the loan portfolio are simultaneously considered.

Formula Allowance

The Bank performs regular credit reviews of the loan and lease portfolio to determine the credit quality and adherence to underwriting standards. When loans and leases are originated, they are assigned a risk rating that is reassessed periodically during the term of the loan through the credit review process. The Company’s risk rating methodology assigns risk ratings ranging from 1 to 10, where a higher rating represents higher risk. The 10 risk rating categories are a primary factor in determining an appropriate amount for the formula allowance.

The formula allowance is calculated by applying risk factors to various segments of pools of outstanding loans. Risk factors are assigned to each portfolio segment based on management’s evaluation of the losses inherent within each segment. Segments or regions with greater risk of loss will therefore be assigned a higher risk factor.

17

Base risk – The portfolio is segmented into loan categories, and these categories are assigned a Base Risk factor based on an evaluation of the loss inherent within each segment.

Extra risk – Additional risk factors provide for an additional allocation of ALLL based on the loan risk rating system and loan delinquency, and reflect the increased level of inherent losses associated with more adversely classified loans.

Changes to risk factors – Risk factors are assigned at origination and may be changed periodically based on management’s evaluation of the following factors: loss experience; changes in the level of non-performing loans; regulatory exam results; changes in the level of adversely classified loans (positive or negative); improvement or deterioration in local economic conditions; and any other factors deemed relevant.

Specific Allowance

Regular credit reviews of the portfolio also identify loans that are considered potentially impaired. Potentially impaired loans are referred to the ALLL Committee which reviews and approves designated loans as impaired. A loan is considered impaired when based on current information and events, we determine that we will probably not be able to collect all amounts due according to the loan contract, including scheduled interest payments. When we identify a loan as impaired, we measure the impairment using discounted cash flows, except when the sole remaining source of the repayment for the loan is the liquidation of the collateral. In these cases, we use the current fair value of the collateral, less selling costs, instead of discounted cash flows. If we determine that the value of the impaired loan is less than the recorded investment in the loan, we either recognize an impairment reserve as a Specific Allowance to be provided for in the allowance for loan and lease losses or charge-off the impaired balance on collateral dependent loans if it is determined that such amount represents a confirmed loss. Loans determined to be impaired with a specific allowance are excluded from the formula allowance so as not to double-count the loss exposure. The non-accrual impaired loans as of period end have already been partially charged off to their estimated net realizable value, and are expected to be resolved over the coming quarters with no additional material loss, absent further decline in market prices.

The combination of the formula allowance component and the specific allowance component lead to an allocated allowance for loan and lease losses.

Unallocated Allowance

The Bank may also maintain an unallocated allowance amount to provide for other credit losses inherent in a loan and lease portfolio that may not have been contemplated in the credit loss factors. This unallocated amount generally comprises less than 10% of the allowance, but may be maintained at higher levels during times of deteriorating economic conditions characterized by falling real estate values. The unallocated amount is reviewed quarterly with consideration of factors including, but not limited to:

• Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;

• Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments;

• Changes in the nature and volume of the portfolio and in the terms of loans;

• Changes in the experience and ability of lending management and other relevant staff;

• Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans;

• Changes in the quality of the institution’s loan review system;

• Changes in the value of underlying collateral for collateral-depending loans;

• The existence and effect of any concentrations of credit, and changes in the level of such concentrations;

• The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institutions’ existing portfolio.

These factors are evaluated through a management survey of the Chief Credit Officer, Chief Lending Officers, Special Asset Manager, and Credit Review Manager. The survey requests responses to evaluate current changes in the nine qualitative factors. This information is then incorporated into our understanding of the reasonableness of the formula factors and our evaluation of the unallocated portion of the ALLL.

Management believes that the ALLL was adequate as of June 30, 2011. There is, however, no assurance that future loan losses will not exceed the levels provided for in the ALLL and could possibly result in additional charges to the provision for loan and lease losses. In addition, bank regulatory authorities, as part of their periodic examination of the Bank, may require additional charges to the provision for loan and lease losses in future periods if warranted as a result of their review. Approximately 80% of our loan portfolio is secured by real estate, and a significant decline in real estate market values may require an increase in the allowance for loan and lease losses. The U.S. recession, the housing market downturn, and declining real estate values in our markets have negatively impacted aspects of our residential development, commercial real estate, commercial construction and commercial loan portfolios. A continued deterioration in our markets may adversely affect our loan portfolio and may lead to additional charges to the provision for loan and lease losses.

18

The reserve for unfunded commitments (“RUC”) is established to absorb inherent losses associated with our commitment to lend funds, such as with a letter or line of credit. The adequacy of the ALLL and RUC are monitored on a regular basis and are based on management's evaluation of numerous factors. For each portfolio segment, these factors include:

• The quality of the current loan portfolio;

• The trend in the loan portfolio's risk ratings;

• Current economic conditions;

• Loan concentrations;

• Loan growth rates;

• Past-due and non-performing trends;

• Evaluation of specific loss estimates for all significant problem loans;

• Historical short (one year), medium (three year), and long-term charge-off rates,

• Recovery experience;

• Peer comparison loss rates.

There have been no significant changes to the Bank’s methodology or policies in the periods presented.

Activity in the Non-Covered Allowance for Loan and Lease Losses

The following tables summarizes activity related to the allowance for non-covered loan and lease losses by non-covered loan portfolio segment for the three and six months ended June 30, 2011 and 2010, respectively:

19

(in thousands)

	Three Months Ended June 30, 2011
	Commercial      Real Estate		Commercial		Residential		Consumer   & Other		Unallocated			Total
Balance, beginning of period	$	63,528	$	20,798	$	5,626	$	856	$	7,025		$	97,833
Charge-offs		(12,883)		(3,179)		(2,195)		(354)		-			(18,611)
Recoveries		2,208		695		100		111		-			3,114
Provision		9,129		5,436		1,623		255		(984	)		15,459
Balance, end of period	$	61,982	$	23,750	$	5,154	$	868	$	6,041		$	97,795
	Three Months Ended June 30, 2010
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Unallocated			Total
Balance, beginning of period	$	70,460	$	20,890	$	8,235	$	863	$	10,336		$	110,784
Charge-offs		(19,605)		(9,961)		(1,201)		(787)		-			(31,554)
Recoveries		4,312		370		50		185		-			4,917
Provision		13,048		8,548		2,689		587		4,895			29,767
Balance, end of period	$	68,215	$	19,847	$	9,773	$	848	$	15,231		$	113,914
	Six Months Ended June 30, 2011
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Unallocated			Total
Balance, beginning of period	$	64,405	$	22,146	$	5,926	$	803	$	8,641		$	101,921
Charge-offs		(24,314)		(11,355)		(2,929)		(888)		-			(39,486)
Recoveries		3,453		1,091		121		206		-			4,871
Provision		18,438		11,868		2,036		747		(2,600)			30,489
Balance, end of period	$	61,982	$	23,750	$	5,154	$	868	$	6,041		$	97,795
	Six Months Ended June 30, 2010
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Unallocated			Total
Balance, beginning of period	$	67,281	$	24,583	$	5,811	$	455	$	9,527		$	107,657
Charge-offs		(35,535)		(32,865)		(1,837)		(1,076)		-			(71,313)
Recoveries		4,596		649		170		282		-			5,697
Provision		31,873		27,480		5,629		1,187		5,704			71,873
Balance, end of period	$	68,215	$	19,847	$	9,773	$	848	$	15,231		$	113,914

The following table presents the allowance and recorded investment in non-covered loans by portfolio segment and balances individually or collectively evaluated for impairment as of June 30, 2011 and 2010, respectively:

20

(in thousands)

	June 30, 2011
	Commercial   Real Estate		Commercial		Residential		Consumer & Other		Unallocated		Total
Allowance for non-covered loans and leases:
Collectively evaluated for impairment	$	59,277	$	20,812	$	5,136	$	868	$	6,041	$	92,134
Individually evaluated for impairment		2,705		2,938		18		-		-		5,661
Total	$	61,982	$	23,750	$	5,154	$	868	$	6,041	$	97,795
Non-covered loans and leases:
Collectively evaluated for impairment	$	3,663,034	$	1,330,749	$	522,309	$	34,584			$	5,550,676
Individually evaluated for impairment		166,464		29,921		178		-				196,563
Total	$	3,829,498	$	1,360,670	$	522,487	$	34,584			$	5,747,239

	June 30, 2010
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Unallocated		Total
Allowance for non-covered loans and leases:
Collectively evaluated for impairment	$	61,127	$	19,836	$	9,548	$	848	$	15,231	$	106,590
Individually evaluated for impairment		7,088		11		225		-				7,324
Total	$	68,215	$	19,847	$	9,773	$	848	$	15,231	$	113,914
Non-covered loans and leases:
Collectively evaluated for impairment	$	3,783,102	$	1,203,558	$	465,633	$	34,215			$	5,486,508
Individually evaluated for impairment		194,373		52,295		4,502		-				251,170
Total	$	3,977,475	$	1,255,853	$	470,135	$	34,215			$	5,737,678

(1) The gross non-covered loan and lease balance excludes deferred loans fees of $11.7 million at June 30, 2011 and $11.0 million at June 30, 2010.

Summary of Reserve for Unfunded Commitments Activity

The following tables present a summary of activity in the reserve for unfunded commitments (“RUC”) and unfunded commitments for the three and six months ended June 30, 2011 and 2010, respectively:

21

(in thousands)

	Three Months Ended June 30, 2011
	Commercial     Real Estate		Commercial		Residential		Consumer   & Other		Total
Balance, beginning of period	$	76	$	621	$	162	$	52	$	911
Net change to other expense		(15)		84		7		1		77
Balance, end of period	$	61	$	705	$	169	$	53	$	988
	Three Months Ended June 30, 2010
	Commercial     Real Estate		Commercial		Residential		Consumer   & Other		Total
Balance, beginning of period	$	47	$	531	$	140	$	47	$	765
Net change to other expense		(6)		(21)		(4)		-		(31)
Balance, end of period	$	41	$	510	$	136	$	47	$	734
	Six Months Ended June 30, 2011
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Balance, beginning of period	$	33	$	575	$	158	$	52	$	818
Net change to other expense		28		130		11		1		170
Balance, end of period	$	61	$	705	$	169	$	53	$	988
	Six Months Ended June 30, 2010
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Balance, beginning of period	$	57	$	484	$	144	$	46	$	731
Net change to other expense		(16)		26		(8)		1		3
Balance, end of period	$	41	$	510	$	136	$	47	$	734
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Unfunded commitments:
June 30, 2011	$	61,478	$	674,210	$	226,790	$	45,483	$	1,007,961
June 30, 2010		41,354		501,667		209,643		39,938		792,602

Non-covered loans sold

In the course of managing the loan portfolio, at certain times, management may decide to sell loans prior to resolution. The following table summarizes loans sold by loan portfolio during the three and six months ended June 30, 2011 and 2010, respectively:

(in thousands)

	Three months ended June 30				Six months ended June 30
	2011		2010		2011		2010
Commercial real estate
Term & multifamily	$	1,385	$	969	$	3,884	$	10,728
Construction & development		-		-		-		1,175
Residential development		-		1,399		2		5,434
Commercial
Term		-		3,210		151		3,210
LOC & other		-		-		2,740		462
Total	$	1,385	$	5,578	$	6,777	$	21,009

22

Asset Quality and Non-Performing Loans

We manage asset quality and control credit risk through diversification of the non-covered loan portfolio and the application of policies designed to promote sound underwriting and loan monitoring practices. The Bank’s Credit Quality Group is charged with monitoring asset quality, establishing credit policies and procedures and enforcing the consistent application of these policies and procedures across the Bank. Reviews of non-performing, past due non-covered loans and larger credits, designed to identify potential charges to the allowance for loan and lease losses, and to determine the adequacy of the allowance, are conducted on an ongoing basis. These reviews consider such factors as the financial strength of borrowers, the value of the applicable collateral, loan loss experience, estimated loan losses, growth in the loan portfolio, prevailing economic conditions and other factors.

A loan is considered impaired when based on current information and events, we determine it is probable that we will not be able to collect all amounts due according to the loan contract, including scheduled interest payments. Generally, when loans are identified as impaired they are moved to our Special Assets Division. When we identify a loan as impaired, we measure the loan for potential impairment using discounted cash flows, except when the sole remaining source of the repayment for the loan is the liquidation of the collateral. In these cases, we use the current fair value of collateral, less selling costs. The starting point for determining the fair value of collateral is through obtaining external appraisals. Generally, external appraisals are updated every six to nine months. We obtain appraisals from a pre-approved list of independent, third party, local appraisal firms. Approval and addition to the list is based on experience, reputation, character, consistency and knowledge of the respective real estate market. At a minimum, it is ascertained that the appraiser is: (a) currently licensed in the state in which the property is located, (b) is experienced in the appraisal of properties similar to the property being appraised, (c) is actively engaged in the appraisal work, (d) has knowledge of current real estate market conditions and financing trends, (e) is reputable, and (f) is not on Freddie Mac’s nor the Bank’s Exclusionary List of appraisers and brokers. In certain cases appraisals will be reviewed by our Real Estate Valuation Services group to ensure the quality of the appraisal and the expertise and independence of the appraiser. Upon receipt and review, an external appraisal is utilized to measure a loan for potential impairment. Our impairment analysis documents the date of the appraisal used in the analysis, whether the officer preparing the report deems it current, and, if not, allows for internal valuation adjustments with justification. Typical justified adjustments might include discounts for continued market deterioration subsequent to appraisal date, adjustments for the release of collateral contemplated in the appraisal, or the value of other collateral or consideration not contemplated in the appraisal. An appraisal over one year old in most cases will be considered stale dated and an updated or new appraisal will be required. Any adjustments from appraised value to net realizable value are detailed and justified in the impairment analysis, which is reviewed and approved by senior credit quality officers and the Company’s Allowance for Loan and Lease Losses (“ALLL”) Committee. Although an external appraisal is the primary source to value collateral dependent loans, we may also utilize values obtained through purchase and sale agreements, negotiated short sales, broker price opinions, or the sales price of the note. These alternative sources of value are used only if deemed to be more representative of value based on updated information regarding collateral resolution. Impairment analyses are updated, reviewed and approved on a quarterly basis at or near the end of each reporting period. Based on these processes, we do not believe there are significant time lapses for the recognition of additional loan loss provisions or charge-offs from the date they become known.

Loans are classified as non-accrual when collection of principal or interest is doubtful—generally if they are past due as to maturity or payment of principal or interest by 90 days or more—unless such loans are well-secured and in the process of collection. Additionally, all loans that are impaired are considered for non-accrual status. Loans placed on non-accrual will typically remain on non-accrual status until all principal and interest payments are brought current and the prospects for future payments in accordance with the loan agreement appear relatively certain.

Loans are reported as restructured when the Bank grants a concession(s) to a borrower experiencing financial difficulties that it would not otherwise consider. Examples of such concessions include a reduction in the loan rate, forgiveness of principal or accrued interest, extending the maturity date(s) or providing a lower interest rate than would be normally available for a transaction of similar risk. As a result of these concessions, restructured loans are impaired as the Bank will not collect all amounts due, both principal and interest, in accordance with the terms of the original loan agreement. Impairment reserves on non-collateral dependent restructured loans are measured by comparing the present value of expected future cash flows on the restructured loans discounted at the interest rate of the original loan agreement to the loan’s carrying value. These impairment reserves are recognized as a specific component to be provided for in the allowance for loan and lease losses.

Loans are reported as past due when installment payments, interest payments, or maturity payments are past due based on contractual terms. All loans determined to be impaired are individually assessed for impairment except for impaired consumer loans which are collectively evaluated for impairment in accordance with ASC 450, Contingencies. The specific factors considered in determining that a loan is impaired include borrower financial capacity, current economic, business and market conditions, collection efforts, collateral position and other factors deemed relevant. Generally, impaired loans are placed on non-accrual status and all cash receipts are applied to the principal balance. Continuation of accrual status and recognition of interest income is generally limited to performing restructured loans.

The Company has written down impaired, non-accrual loans as of June 30, 2011 to their estimated net realizable value, generally based on disposition value, and expects resolution with no additional material loss, absent further decline in market prices.

Non-Covered Non-Accrual Loans and Loans Past Due

The following table summarizes our non-covered non-accrual loans and loans past due by loan class as of June 30, 2011 and December 31, 2010:

23

(in thousands)

	June 30, 2011
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Total Past Due		Nonaccrual		Current		Total Non-covered Loans and Leases
Commercial real estate
Term & multifamily	$	15,154	$	16,940	$	555	$	32,649	$	53,059	$	3,446,426	$	3,532,134
Construction & development		99		-		-		99		8,093		176,515		184,707
Residential development		2,573		-		-		2,573		25,858		84,226		112,657
Commercial
Term		1,548		957		750		3,255		8,070		561,077		572,402
LOC & other		476		495		5,713		6,684		14,809		766,775		788,268
Residential
Mortgage		1,357		908		4,467		6,732		-		238,302		245,034
Home equity loans & lines		1,800		1,277		1,123		4,200		-		273,253		277,453
Consumer & other		207		60		529		796		-		33,788		34,584
Total	$	23,214	$	20,637	$	13,137	$	56,988	$	109,889	$	5,580,362	$	5,747,239
Deferred loan fees, net														(11,686	)
Total													$	5,735,553

	December 31, 2010
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Total Past Due		Nonaccrual		Current		Total Non-covered Loans and Leases
Commercial real estate
Term & multifamily	$	14,596	$	8,328	$	3,008	$	25,932	$	49,162	$	3,408,381	$	3,483,475
Construction & development		2,172		6,726		-		8,898		20,124		218,792		247,814
Residential development		640		-		-		640		34,586		112,587		147,813
Commercial
Term		2,010		932		-		2,942		6,271		500,240		509,453
LOC & other		5,939		1,418		18		7,375		28,034		712,010		747,419
Residential
Mortgage		1,314		1,101		3,372		5,787		-		216,629		222,416
Home equity loans & lines		1,096		1,351		232		2,679		-		275,906		278,585
Consumer & other		361		233		441		1,035		-		32,008		33,043
Total	$	28,128	$	20,089	$	7,071	$	55,288	$	138,177	$	5,476,553	$	5,670,018
Deferred loan fees, net														(11,031	)
Total													$	5,658,987

Non-Covered Impaired Loans

The following table summarizes our impaired non-covered loans by loan class as of June 30, 2011 and December 31, 2010:

24

(in thousands)

	June 30, 2011
	Unpaid Principal Balance		Recorded Investment		Related Allowance
With no related allowance recorded:
Commercial real estate
Term & multifamily	$	65,617	$	53,059	$	-
Construction & development		33,793		22,446		-
Residential development		50,608		35,396		-
Commercial
Term		10,498		8,923		-
LOC & other		46,650		15,087		-
Residential
Mortgage		-		-		-
Home equity loans & lines		-		-		-
Consumer & other		-		-		-
With an allowance recorded:
Commercial real estate
Term & multifamily		12,705		12,705		396
Construction & development		13,363		12,343		122
Residential development		30,515		30,515		2,187
Commercial
Term		198		198		7
LOC & other		5,713		5,713		2,931
Residential
Mortgage		178		178		18
Home equity loans & lines		-		-		-
Consumer & other		-		-		-
Total:
Commercial real estate		206,601		166,464		2,705
Commercial		63,059		29,921		2,938
Residential		178		178		18
Consumer & other		-		-		-
Total	$	269,838	$	196,563	$	5,661

25

	December 31, 2010
	Unpaid Principal Balance		Recorded Investment		Related Allowance
With no related allowance recorded:
Commercial real estate
Term & multifamily	$	62,605	$	49,790	$	-
Construction & development		33,091		25,558		-
Residential development		63,859		39,011		-
Commercial
Term		8,024		6,969		-
LOC & other		56,046		19,814		-
Residential
Mortgage		-		-		-
Home equity loans & lines		-		-		-
Consumer & other		-		-		-
With an allowance recorded:
Commercial real estate
Term & multifamily		29,926		28,070		1,614
Construction & development		-		-		-
Residential development		46,059		44,504		906
Commercial
Term		205		205		9
LOC & other		9,878		8,519		2,702
Residential
Mortgage		179		179		8
Home equity loans & lines		-		-		-
Consumer & other		-		-		-
Total:
Commercial real estate		235,540		186,933		2,520
Commercial		74,153		35,507		2,711
Residential		179		179		8
Consumer & other		-		-		-
Total	$	309,872	$	222,619	$	5,239

Loans with no related allowance reported generally represent non-accrual loans. The Company recognizes the charge-off of impairment reserves on impaired loans in the period it arises for collateral dependent loans. Therefore, the non-accrual loans as of June 30, 2011 have already been written-down to their estimated net realizable value, based on disposition value, and are expected to be resolved with no additional material loss, absent further decline in market prices. The valuation allowance on impaired loans primarily represents the impairment reserves on performing restructured loans, and is measured by comparing the present value of expected future cash flows on the restructured loans discounted at the interest rate of the original loan agreement to the loan’s carrying value.

At June 30, 2011 and December 31, 2010, impaired loans of $81.0 million and $84.4 million were classified as accruing restructured loans, respectively. The restructurings were granted in response to borrower financial difficulty, and generally provide for a temporary modification of loan repayment terms. The restructured loans on accrual status and one loan included in loans past due 90+ days and accruing represent the only impaired loans accruing interest at June 30, 2011. The restructured loans on accrual status represent the only impaired loans accruing interest at December 31, 2010. In order for a restructured loan to be considered for accrual status, the loan’s collateral coverage generally will be greater than or equal to 100% of the loan balance, the loan is current on payments, and the borrower must either prefund an interest reserve or demonstrate the ability to make payments from a verified source of cash flow. The Company had no obligations to lend additional funds on the restructured loans as of June 30, 2011.

The following table summarizes our average recorded investment and interest income recognized on impaired non-covered loans by loan class for the three months and six months ended June 30, 2011 and 2010:

26

(in thousands)

	For the three months ended June 30, 2011				For the three months ended June 30, 2010
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate
Term & multifamily	$	54,086	$	-	$	57,851	$	-
Construction & development		21,063		-		24,668		-
Residential development		37,841		-		31,695		-
Commercial
Term		8,307		-		10,768		-
LOC & other		17,978		-		42,009		-
Residential
Mortgage		-		-		-		-
Home equity loans & lines		-		-		-		-
Consumer & other		-		-		-		-
With an allowance recorded:
Commercial real estate
Term & multifamily		15,733		233		29,731		220
Construction & development		8,905		266		4,264		-
Residential development		32,943		320		60,605		506
Commercial
Term		202		11		225		12
LOC & other		2,857		-		-		4
Residential
Mortgage		178		1		4,474		62
Home equity loans & lines		-		-		35		-
Consumer & other		-		-		-		-
Total:
Commercial real estate		170,571		819		208,814		726
Commercial		29,344		11		53,002		16
Residential		178		1		4,509		62
Consumer & other		-		-		-		-
Total	$	200,093	$	831	$	266,325	$	804
	For the six months ended June 30, 2011				For the six months ended June 30, 2010
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate
Term & multifamily	$	54,725	$	-	$	60,241	$	-
Construction & development		23,238		-		28,665		-
Residential development		37,762		-		39,438		-
Commercial
Term		8,678		-		10,673		-
LOC & other		24,724		-		46,905		-
Residential
Mortgage		-		-		-		-
Home equity loans & lines		-		-		-		-
Consumer & other		-		-		-		-
With an allowance recorded:
Commercial real estate
Term & multifamily		19,995		424		32,856		451
Construction & development		6,506		338		2,843		-
Residential development		40,165		670		60,053		937
Commercial
Term		268		23		296		24
LOC & other		2,532		-		200		8
Residential
Mortgage		1,369		3		4,705		121
Home equity loans & lines		7		-		23		1
Consumer & other		-		-		-		-
Total:
Commercial real estate		182,391		1,432		224,096		1,388
Commercial		36,202		23		58,074		32
Residential		1,376		3		4,728		122
Consumer & other		-		-		-		-
Total	$	219,969	$	1,458	$	286,898	$	1,542

27

The impaired loans for which these interest income amounts were recognized primarily relate to accruing restructured loans.

Non-covered Credit Quality Indicators

As previously noted, the Company’s risk rating methodology assigns risk ratings ranging from 1 to 10, where a higher rating represents higher risk. The Bank differentiates its lending portfolios into homogeneous loans (generally consumer loans) and non-homogeneous loans (generally all non-consumer loans). The 10 risk rating categories can be generally described by the following groupings for non-homogeneous loans:

Minimal Risk – A minimal risk loan, risk rated 1, is to a borrower of the highest quality. The borrower has an unquestioned ability to produce consistent profits and service all obligations and can absorb severe market disturbances with little or no difficulty.

Low Risk – A low risk loan, risk rated 2, is similar in characteristics to a minimal risk loan. Margins may be smaller or protective elements may be subject to greater fluctuation. The borrower will have a strong demonstrated ability to produce profits, provide ample debt service coverage and to absorb market disturbances.

Modest Risk – A modest risk loan, risk rated 3, is a desirable loan with excellent sources of repayment and no currently identifiable risk of collection. The borrower exhibits a very strong capacity to repay the credit in accordance with the repayment agreement. The borrower may be susceptible to economic cycles, but will have reserves to weather these cycles.

Average Risk – An average risk loan, risk rated 4, is an attractive loan with sound sources of repayment and no material collection or repayment weakness evident. The borrower has an acceptable capacity to pay in accordance with the agreement. The borrower is susceptible to economic cycles and more efficient competition, but should have modest reserves sufficient to survive all but the most severe downturns or major setbacks.

Acceptable Risk – An acceptable risk loan, risk rated 5, is a loan with lower than average, but still acceptable credit risk. These borrowers may have higher leverage, less certain but viable repayment sources, have limited financial reserves and may possess weaknesses that can be adequately mitigated through collateral, structural or credit enhancement. The borrower is susceptible to economic cycles and is less resilient to negative market forces or financial events. Reserves may be insufficient to survive a modest downturn.

Watch – A watch loan, risk rated 6, is still pass-rated, but represents the lowest level of acceptable risk due to an emerging risk element or declining performance trend. Watch ratings are expected to be temporary, with issues resolved or manifested to the extent that a higher or lower rating would be appropriate. The borrower should have a plausible plan, with reasonable certainty of success, to correct the problems in a short period of time. Borrowers rated Watch are characterized by elements of uncertainty, such as:

• Borrower may be experiencing declining operating trends, strained cash flows or less-than anticipated performance. Cash flow should still be adequate to cover debt service, and the negative trends should be identified as being of a short-term or temporary nature.

• The borrower may have experienced a minor, unexpected covenant violation.

• Companies who may be experiencing tight working capital or have a cash cushion deficiency.

• Loans may also be a Watch if financial information is late, there is a documentation deficiency, the borrower has experienced unexpected management turnover, or if they face industry issues that, when combined with performance factors create uncertainty in their future ability to perform.

• Delinquent payments, increasing and material overdraft activity, request for bulge and/or out-of-formula advances may be an indicator of inadequate working capital and may suggest a lower rating.

• Failure of the intended repayment source to materialize as expected, or renewal of a loan (other than cash/marketable security secured or lines of credit) without reduction are possible indicators of a Watch or worse risk rating.

Special Mention – A Special Mention loan, risk rated 7, has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or the institutions credit position at some future date. They contain unfavorable characteristics and are generally undesirable. Loans in this category are currently protected but are potentially weak and constitute an undue and unwarranted credit risk, but not to the point of a Substandard classification. A Special Mention loan has potential weaknesses, which if not checked or corrected, weaken the asset or inadequately protect the Bank’s position at some future date. Such weaknesses include:

• Performance is poor or significantly less than expected. There may be a temporary debt-servicing deficiency or inadequate working capital as evidenced by a cash cushion deficiency, but not to the extent that repayment is compromised. Material violation of financial covenants is common.

• Loans with unresolved material issues that significantly cloud the debt service outlook, even though a debt servicing deficiency does not currently exist.

• Modest underperformance or deviation from plan for real estate loans where absorption of rental/sales units is necessary to properly service the debt as structured. Depth of support for interest carry provided by owner/guarantors may mitigate and provide for improved rating.

28

• This rating may be assigned when a loan officer is unable to supervise the credit properly due to inadequate expertise, an inadequate loan agreement, an inability to control collateral, failure to obtain proper documentation, or any other deviation from prudent lending practices.

• Unlike a Substandard credit, there should be a reasonable expectation that these temporary issues will be corrected within the normal course of business, rather than liquidation of assets, and in a reasonable period of time.

Substandard – A substandard asset, risk rated 8, is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard. Loans are classified as Substandard when they have unsatisfactory characteristics causing unacceptable levels of risk. A substandard loan normally has one or more well-defined weaknesses that could jeopardize repayment of the debt. The likely need to liquidate assets to correct the problem, rather than repayment from successful operations is the key distinction between Special Mention and Substandard. The following are examples of well-defined weaknesses:

• Cash flow deficiencies or trends are of a magnitude to jeopardize current and future payments with no immediate relief. A loss is not presently expected, however the outlook is sufficiently uncertain to preclude ruling out the possibility.

• Borrower has been unable to adjust to prolonged and unfavorable industry or economic trends.

• Material underperformance or deviation from plan for real estate loans where absorption of rental/sales units is necessary to properly service the debt and risk is not mitigated by willingness and capacity of owner/guarantor to support interest payments.

• Management character or honesty has become suspect. This includes instances where the borrower has become uncooperative.

• Due to unprofitable or unsuccessful business operations, some form of restructuring of the business, including liquidation of assets, has become the primary source of loan repayment. Cash flow has deteriorated, or been diverted, to the point that sale of collateral is now the Bank’s primary source of repayment (unless this was the original source of repayment). If the collateral is under the Bank’s control and is cash or other liquid, highly marketable securities and properly margined, then a more appropriate rating might be Special Mention or Watch.

• The borrower is bankrupt, or for any other reason, future repayment is dependent on court action.

• There is material, uncorrectable faulty documentation or materially suspect financial information.

Doubtful/Loss – Loans classified as doubtful, risk rated 9 to 10, have all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work towards strengthening of the asset, classification as a loss (and immediate charge-off) is deferred until more exact status may be determined. Pending factors include proposed merger, acquisition, liquidation procedures, capital injection, and perfection of liens on additional collateral and refinancing plans. In certain circumstances, a Doubtful rating will be temporary, while the Bank is awaiting an updated collateral valuation. In these cases, once the collateral is valued and appropriate margin applied, the remaining un-collateralized portion will be charged off. The remaining balance, properly margined, may then be upgraded to Substandard, however must remain on non-accrual. A loss rating is assigned to loans considered un-collectible and of such little value that the continuance as an active Bank asset is not warranted. This rating does not mean that the loan has no recovery or salvage value, but rather that the loan should be charged off now, even though partial or full recovery may be possible in the future.

Impaired – Loans are classified as impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal and interest when due, in accordance with the terms of the original loan agreement, without unreasonable delay. This generally includes all loans classified as non-accrual and troubled debt restructurings.

The following table summarizes our internal risk rating by loan class as of June 30, 2011 and December 31, 2010:

(in thousands)

29

(in thousands)

	June 30, 2011
	Pass/ Watch		Special Mention		Substandard		Doubtful/Loss		Impaired		Total
Commercial real estate
Term & multifamily	$	3,004,552	$	317,006	$	144,812	$	-	$	65,764	$	3,532,134
Construction & development		111,702		18,625		19,591		-		34,789		184,707
Residential development		24,704		10,021		12,021		-		65,911		112,657
Commercial
Term		509,666		29,983		23,632		-		9,121		572,402
LOC & other		690,219		41,091		36,158		-		20,800		788,268
Residential
Mortgage		238,198		2,369		2,003		2,286		178		245,034
Home equity loans & lines		273,916		2,414		556		567		-		277,453
Consumer & other		33,789		267		36		492		-		34,584
Total	$	4,886,746	$	421,776	$	238,809	$	3,345	$	196,563	$	5,747,239
Deferred loan fees, net												(11,686	)
Total											$	5,735,553
	December 31, 2010
	Pass/ Watch		Special Mention		Substandard		Doubtful/Loss		Impaired		Total
Commercial real estate
Term & multifamily	$	2,978,116	$	314,094	$	113,405	$	-	$	77,860	$	3,483,475
Construction & development		145,108		25,295		51,853		-		25,558		247,814
Residential development		27,428		13,764		23,106		-		83,515		147,813
Commercial
Term		472,512		17,658		12,109		-		7,174		509,453
LOC & other		646,163		30,761		42,162		-		28,333		747,419
Residential
Mortgage		216,899		2,414		786		2,138		179		222,416
Home equity loans & lines		275,906		2,447		125		107		-		278,585
Consumer & other		32,008		595		29		411		-		33,043
Total	$	4,794,140	$	407,028	$	243,575	$	2,656	$	222,619	$	5,670,018
Deferred loan fees, net												(11,031	)
Total											$	5,658,987

Note 6 – Covered Assets and FDIC Indemnification Asset

Covered Loans

Loans acquired in a FDIC-assisted acquisition that are subject to a loss-share agreement are referred to as “covered loans” and reported separately in our statements of financial condition. Covered loans are reported exclusive of the expected cash flow reimbursements expected from the FDIC.

Acquired loans are valued as of acquisition date in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 805, Business Combinations. Loans purchased with evidence of credit deterioration since origination for which it is probable that all contractually required payments will not be collected are accounted for under FASB ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. Because of the significant fair value discounts associated with the acquired portfolios, the concentration of real estate related loans (to finance or secured by real estate collateral) and the decline in real estate values in the regions serviced, and after considering the underwriting standards of the acquired originating bank, the Company elected to account for all acquired loans under ASC 310-30. Under FASB ASC 805 and ASC 310-30, loans are to be recorded at fair value at acquisition date, factoring in credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for loan losses is not carried over or recorded as of the acquisition date. We have aggregated the acquired loans into various loan pools based on multiple layers of common risk characteristics for the purpose of determining their respective fair values as of their acquisition dates, and for applying the subsequent recognition and measurement provisions for income accretion and impairment testing.

Acquired loans were first segregated between those designated as performing versus those designated as non-performing. In this application, ‘performing’ and ‘non-performing’ loans were defined in accordance with the scoping requirements of ASC 310-30, that is the ‘non-performing’ loans individually exhibited evidence of deteriorated credit quality since origination for which it is probable that we will not be able to collect all contractually required payments receivable. Our Credit Quality and Credit Review teams identified these non-performing credits on a loan-by-loan basis during the due diligence process. Generally, identified non-performing loans tended to be risk rated substandard or worse on the acquired institution’s books. Collectively, the non-performing loans would be considered the ‘classic’ application of ASC 310-30. The remaining performing notes were accounted for under ASC 310-30 by analogy due to the significant fair value discounts associated with the pools resulting from the underwriting standards of the acquired bank (that often contributed to the bank’s failure), the concentration of loans for the purpose of, and collateralized by, real estate, and the general economic condition of the regions each acquired bank serviced. We deem analogizing all loans to ASC 310-30 acceptable as a significant component of the fair value discount applied to each loan pool is attributed to estimated credit losses that are anticipated to occur over the life of each respective loan pool.

30

Once notes were separated based on their expected future performance, they were further segregated based on specific loan types (purpose/collateral) and then their principal cash flow and interest rate characteristics. The most significant loan type categories utilized (in no particular order) were commercial residential development, commercial construction, farmland, 1^st lien single family mortgages, 2^nd lien single family loans, single family revolving lines of credit, multifamily mortgages, owner occupied commercial real estate, non-owner occupied commercial real estate, commercial loans, commercial lines of credit, consumer installment loans, and consumer lines of credit. Next, groups of loans were segregated based on repayment characteristics, specifically whether the notes’ principal balances were amortizing or interest-only. Lastly, loans were separated by various interest rate characteristics, such as whether the interest rate was fixed or variable. For those loans whose interest rates were variable, they were also segregated by their underlying indices (e.g. PRIME, Federal Home Loan Bank, or constant maturity treasury) and whether or not there were interest rate floors.

The following table presents the number of pools, number of loans and acquired unpaid principal balance, by performing (“analogized 310-30”), non-performing (“classic 310-30”) and in total, separately for each institution acquired in 2010.

(dollars in millions)

	Evergreen		Rainier Pacific		Nevada Security
Performing loans (“Analogized ASC 310-30”):
Number of Pools		15		19		19
Number of Loans		1,263		3,647		402
Acquired Unpaid Principal Balance	$	247.9	$	516.9	$	224.2
Non-performing loans (“Classic ASC 310-30”):
Number of Pools		8		10		9
Number of Loans		127		39		106
Acquired Unpaid Principal Balance	$	120.6	$	44.5	$	103.4
Total Portfolio:
Number of Pools		23		29		28
Number of Loans		1,390		3,686		508
Acquired Unpaid Principal Balance	$	368.5	$	561.4	$	327.6

The fair value of each loan pool was computed by discounting the expected cash flows at their estimated market discount rate. Cash flows expected to be collected at acquisition date were estimated by applying certain key assumptions to each loan pool, such as credit loss rates, prepayment speeds, and resolution terms related to non-performing loans, against the contractual cash flows of the underlying loans. Credit loss estimates for each pool were determined by considering factors such as, underlying collateral types, collateral locations, estimated collateral values, and credit quality indicators such as risk ratings. Market discount rates were determined using a buildup approach which included assumptions with respect to funding cost and funding mix, a market participant’s required rate of return on equity capital, servicing costs and a liquidity premium.

The following table reflects the estimated fair value of the acquired loans at the acquisition dates:

31

(in thousands)

	Evergreen		Rainier		Nevada Security		Total
	January 22, 2010		February 26, 2010		June 18, 2010
Commercial real estate
Term & multifamily	$	141,076	$	331,869	$	154,119	$	627,064
Construction & development		18,832		562		9,481		28,875
Residential development		16,219		10,340		15,641		42,200
Commercial
Term		27,272		14,850		18,257		60,379
LOC & other		23,965		18,169		11,408		53,542
Residential
Mortgage		11,886		39,897		1,539		53,322
Home equity loans & lines		8,308		31,029		4,421		43,758
Consumer & other		4,935		11,624		641		17,200
Total	$	252,493	$	458,340	$	215,507	$	926,340

In estimating the fair value of the covered loans at the acquisition date, we (a) calculated the contractual amount and timing of undiscounted principal and interest payments and (b) estimated the amount and timing of undiscounted expected principal and interest payments. The difference between these two amounts represents the nonaccretable difference. On the acquisition date, the amount by which the undiscounted expected cash flows exceed the estimated fair value of the acquired loans is the “accretable yield”. The accretable yield is then measured at each financial reporting date and represents the difference between the remaining undiscounted expected cash flows and the current carrying value of the loans.

The following table presents a reconciliation of the undiscounted contractual cash flows, nonaccretable difference, accretable yield, and fair value of covered loans for each respective acquired loan portfolio at the acquisition dates:

(in thousands)

	Evergreen			Rainier			Nevada Security			Total
	January 22, 2010			February 26, 2010			June 18, 2010
Undiscounted contractual cash flows	$	498,216		$	821,972		$	396,134		$	1,716,322
Undiscounted cash flows not expected to be collected (nonaccretable difference)		(124,131	)		(125,774	)		(115,021	)		(364,926	)
Undiscounted cash flows expected to be collected		374,085			696,198			281,113			1,351,396
Accretable yield at acquisition		(121,592	)		(237,858	)		(65,606	)		(425,056	)
Estimated fair value of loans acquired at acquisition	$	252,493		$	458,340		$	215,507		$	926,340

The covered loan portfolio also includes revolving lines of credit with funded and unfunded commitments. Funds advanced at the time of acquisition are included in the loan pools and are accounted for under ASC 310-30. Any additional advances on these loans subsequent to the acquisition date may or may not be covered depending on the nature of the disbursement and the terms of each respective loss-sharing agreement, and are not accounted for under ASC 310-30.

The covered loans acquired are and will continue to be subject to the Company’s internal and external credit review and monitoring. To the extent there is experienced or projected credit deterioration on the acquired loan pools subsequent to amounts estimated at the previous remeasurement date, this deterioration will be measured, and a provision for credit losses will be charged to earnings. Additionally, provision for credit losses will be recorded on advances on covered loans subsequent to acquisition date in a manner consistent with the allowance for non-covered loan and lease losses. These provisions will be mostly offset by an increase to the FDIC indemnification asset, which is recognized in non-interest income.

Covered Loans

The following table presents the major types of covered loans as of June 30, 2011 and December 31, 2010:

(in thousands)

	June 30, 2011
	Evergreen		Rainier		Nevada Security		Total
Commercial real estate
Term & multifamily	$	107,772	$	276,358	$	131,819	$	515,949
Construction & development		12,398		690		6,730		19,818
Residential development		7,055		171		8,721		15,947
Commercial
Term		15,406		8,913		12,932		37,251
LOC & other		9,655		12,623		6,202		28,480
Residential
Mortgage		8,079		31,120		1,869		41,068
Home equity loans & lines		5,278		22,925		3,251		31,454
Consumer & other		2,293		6,416		-		8,709
Total	$	167,936	$	359,216	$	171,524	$	698,676

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	December 31, 2010
	Evergreen		Rainier		Nevada Security		Total
Commercial real estate
Term & multifamily	$	124,743	$	303,585	$	141,314	$	569,642
Construction & development		14,162		854		7,419		22,435
Residential development		11,024		2,310		11,372		24,706
Commercial
Term		18,828		10,811		12,961		42,600
LOC & other		11,876		14,320		9,031		35,227
Residential
Mortgage		8,129		35,026		1,669		44,824
Home equity loans & lines		6,737		25,163		3,725		35,625
Consumer & other		2,781		8,058		-		10,839
Total	$	198,280	$	400,127	$	187,491	$	785,898

The outstanding contractual unpaid principal balance, excluding purchase accounting adjustments, at June 30, 2011 was $242.1 million, $447.5 million and $283.2 million, for Evergreen, Rainier, and Nevada Security, respectively, as compared to $286.6 million, $481.7 million and $295.4 million, for Evergreen, Rainier, and Nevada Security, respectively, at December 31, 2010.

In estimating the fair value of the covered loans at the acquisition date, we (a) calculated the contractual amount and timing of undiscounted principal and interest payments and (b) estimated the amount and timing of undiscounted expected principal and interest payments. The difference between these two amounts represents the nonaccretable difference.

On the acquisition date, the amount by which the undiscounted expected cash flows exceed the estimated fair value of the acquired loans is the “accretable yield”. The accretable yield is then measured at each financial reporting date and represents the difference between the remaining undiscounted expected cash flows and the current carrying value of the loans.

The following table presents the changes in the accretable yield for the three and six months ended June 30, 2011 and 2010 for each respective acquired loan portfolio:

33

	Three months ended June 30,
	2011
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	75,081		$	155,285		$	69,301		$	299,667
Accretion to interest income		(7,904	)		(8,396	)		(5,926	)		(22,226	)
Disposals		(4,181	)		(2,803	)		(1,403	)		(8,387	)
Reclassifications (to)/from nonaccretable difference		4,473			(89	)		6,622			11,006
Balance, end of period	$	67,469		$	143,997		$	68,594		$	280,060
	Three months ended June 30,
	2010
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	118,119		$	233,678		$	-		$	351,797
Additions resulting from acquisitions		-			-			65,606			65,606
Accretion to interest income		(3,528	)		(8,575	)		(553	)		(12,656	)
Disposals		(2,234	)		(1,931	)		(90	)		(4,255	)
Reclassifications (to)/from nonaccretable difference		(28,422	)		(17,490	)		86			(45,826	)
Balance, end of period	$	83,935		$	205,682		$	65,049		$	354,666
	Six months ended June 30,
	2011
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	90,771		$	172,615		$	73,515		$	336,901
Accretion to interest income		(15,613	)		(17,111	)		(11,049	)		(43,773	)
Disposals		(6,973	)		(9,447	)		(2,807	)		(19,227	)
Reclassifications (to)/from nonaccretable difference		(716	)		(2,060	)		8,935			6,159
Balance, end of period	$	67,469		$	143,997		$	68,594		$	280,060
	Six months ended June 30,
	2010
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	-		$	-		$	-		$	-
Additions resulting from acquisitions		121,592			237,858			65,606			425,056
Accretion to interest income		(6,759	)		(11,599	)		(553	)		(18,911	)
Disposals		(2,825	)		(3,388	)		(90	)		(6,303	)
Reclassifications (to)/from nonaccretable difference		(28,073	)		(17,189	)		86			(45,176	)
Balance, end of period	$	83,935		$	205,682		$	65,049		$	354,666

Allowance for Covered Loan and Lease Losses

The following table summarizes activity related to the allowance for covered loan and lease losses by covered loan portfolio segment for the three and six months ended June 30, 2011, respectively:

34

(in thousands)

	Three Months Ended June 30, 2011
	Commercial Real Estate			Commercial			Residential			Consumer & Other			Total
Balance, beginning of period	$	5,068		$	1,800		$	962		$	413		$	8,243
Charge-offs		(742	)		(184	)		(194	)		(659	)		(1,779	)
Recoveries		-			-			-			-			-
Provision		1,388			1,016			425			926			3,755
Balance, end of period	$	5,714		$	2,632		$	1,193		$	680		$	10,219
	Six Months Ended June 30, 2011
	Commercial Real Estate			Commercial			Residential			Consumer & Other			Total
Balance, beginning of period	$	2,465		$	176		$	56		$	24		$	2,721
Charge-offs		(1,895	)		(244	)		(823	)		(563	)		(3,525	)
Recoveries		-			-			-			-			-
Provision		5,144			2,700			1,960			1,219			11,023
Balance, end of period	$	5,714		$	2,632		$	1,193		$	680		$	10,219

The following table presents the allowance and recorded investment in by covered loan portfolio segment as of June 30, 2011:

(in thousands)

	June 30, 2011
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Allowance for covered loans and leases:
Loans acquired with deteriorated credit quality (1)	$	5,303	$	2,019	$	1,163	$	657	$	9,142
Collectively evaluated for impairment (2)		411		613		30		23		1,077
Total	$	5,714	$	2,632	$	1,193	$	680	$	10,219
Covered loans and leases:
Loans acquired with deteriorated credit quality (1)	$	549,771	$	42,352	$	68,291	$	6,555	$	666,969
Collectively evaluated for impairment (2)	$	1,943	$	23,379	$	4,231	$	2,154		31,707
Total	$	551,714	$	65,731	$	72,522	$	8,709	$	698,676

(1) In accordance with ASC 310-30, the valuation allowance is netted against the carrying value of the covered loan and lease balance.

(2) The allowance on covered loan and lease losses includes an allowance on covered loan advances on acquired loans subsequent to acquisition.

The valuation allowance on covered loans was reduced by recaptured provision of $1.0 million and $1.1 million respectively, for the three and six months ended June 30, 2011.

There was no valuation allowance on covered loans and no allowance on covered loan advances on acquired loans subsequent to acquisition at June 30, 2010.

Covered Credit Quality Indicators

Covered loans risk rated in a manner consistent with non-covered loans. As previously noted, the Company’s risk rating methodology assigns risk ratings ranging from 1 to 10, where a higher rating represents higher risk. The 10 risk rating groupings are described fully in Note 5. The below table includes both loans acquired with deteriorated credit quality accounted for under ASC 310-30 and covered loan advances on acquired loans subsequent to acquisition.

The following table summarizes our internal risk rating grouping by covered loans, net class as of June 30, 2011 and December 31, 2010:

35

(in thousands)

	June 30, 2011
	Pass/ Watch		Special Mention		Substandard		Doubtful/Loss		Total
Commercial real estate
Term & multifamily	$	419,493	$	38,176	$	47,689	$	10,591	$	515,949
Construction & development		3,060		2,919		8,489		5,350		19,818
Residential development		1,646		-		9,012		5,289		15,947
Commercial
Term		24,285		1,970		8,385		2,611		37,251
LOC & other		19,506		1,953		6,720		301		28,480
Residential
Mortgage		41,051		-		17		-		41,068
Home equity loans & lines		31,393		-		61		-		31,454
Consumer & other		8,709		-		-		-		8,709
Total	$	549,143	$	45,018	$	80,373	$	24,142	$	698,676
	December 31, 2010
	Pass/ Watch		Special Mention		Substandard		Doubtful/Loss		Total
Commercial real estate
Term & multifamily	$	485,238	$	32,150	$	44,833	$	7,421	$	569,642
Construction & development		6,155		3,799		7,640		4,841		22,435
Residential development		6,625		1,322		12,907		3,852		24,706
Commercial
Term		31,760		2,119		7,087		1,634		42,600
LOC & other		22,960		4,246		7,183		838		35,227
Residential
Mortgage		44,524		-		300		-		44,824
Home equity loans & lines		34,998		-		627		-		35,625
Consumer & other		10,827		-		12		-		10,839
Total	$	643,087	$	43,636	$	80,589	$	18,586	$	785,898

Covered Other Real Estate Owned

All OREO acquired in FDIC-assisted acquisitions that are subject to a FDIC loss-share agreement are referred to as “covered OREO” and reported separately in our statements of financial position. Covered OREO is reported exclusive of expected reimbursement cash flows from the FDIC. Foreclosed covered loan collateral is transferred into covered OREO at the collateral’s net realizable value, less selling costs.

Covered OREO was initially recorded at its estimated fair value on the acquisition date based on similar market comparable valuations less estimated selling costs. Any subsequent valuation adjustments due to declines in fair value will be charged to non-interest expense, and will be mostly offset by non-interest income representing the corresponding increase to the FDIC indemnification asset for the offsetting loss reimbursement amount. Any recoveries of previous valuation adjustments will be credited to non-interest expense with a corresponding charge to non-interest income for the portion of the recovery that is due to the FDIC.

The following table summarizes the activity related to the covered OREO for the three and six months ended June 30, 2011 and 2010:

(in thousands)

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Balance, beginning of period	$	27,689		$	8,995		$	29,863		$	-
Acquisition		-			17,938			-			26,939
Additions to covered OREO		5,632			2,560			8,668			2,669
Dispositions of covered OREO		(2,503	)		(1,198	)		(6,457	)		(1,313	)
Valuation adjustments in the period		(665	)		(5	)		(1,921	)		(5	)
Balance, end of period	$	30,153		$	28,290		$	30,153		$	28,290

36

FDIC Indemnification Asset

The Company has elected to account for amounts receivable under the loss-share agreement as an indemnification asset in accordance with FASB ASC 805, Business Combinations. The FDIC indemnification asset is initially recorded at fair value, based on the discounted value of expected future cash flows under the loss-share agreement. The difference between the present value and the undiscounted cash flows the Company expects to collect from the FDIC will be accreted into non-interest income over the life of the FDIC indemnification asset.

Subsequent to initial recognition, the FDIC indemnification asset is reviewed quarterly and adjusted for any changes in expected cash flows based on recent performance and expectations for future performance of the covered assets. These adjustments are measured on the same basis as the related covered loans and covered other real estate owned. Any increases in cash flow of the covered assets over those expected will reduce the FDIC indemnification asset and any decreases in cash flow of the covered assets under those expected will increase the FDIC indemnification asset. Increases and decreases to the FDIC indemnification asset are recorded as adjustments to non-interest income. The resulting carrying value of the indemnification asset represents the amounts recoverable from the FDIC for future expected losses, and the amounts due from the FDIC for claims related to covered losses the Company have incurred less amounts due back to the FDIC relating to shared recoveries.

The following table summarizes the activity related to the FDIC indemnification asset for the three and six months ended June 30, 2011 and 2010:

(in thousands)

	Three months ended June 30,
	2011
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	40,379		$	37,875		$	53,618		$	131,872
Change in FDIC indemnification asset		(2,895	)		(811	)		(1,845	)		(5,551	)
Transfers to due from FDIC and other		(1,366	)		(1,065	)		(6,962	)		(9,393	)
Balance, end of period	$	36,118		$	35,999		$	44,811			116,928
	Three months ended June 30,
	2010
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	71,696		$	70,259		$	-		$	141,955
Acquisitions		-			-			99,160			99,160
Change in FDIC indemnification asset		539			(360	)		84			263
Transfers to due from FDIC and other		(167	)		(15,301	)		(556	)		(16,024	)
Balance, end of period	$	72,068		$	54,598		$	98,688		$	225,354
	Six months ended June 30,
	2011
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	40,606		$	43,726		$	62,081		$	146,413
Change in FDIC indemnification asset		1,850			(4,921	)		425			(2,646	)
Transfers to due from FDIC and other		(6,338	)		(2,806	)		(17,695	)		(26,839	)
Balance, end of period	$	36,118		$	35,999		$	44,811			116,928
	Six months ended June 30,
	2010
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	-		$	-		$	-		$	-
Acquisitions		71,755			76,603			99,160			247,518
Change in FDIC indemnification asset		939			(150	)		84			873
Transfers to due from FDIC and other		(626	)		(21,855	)		(556	)		(23,037	)
Balance, end of period	$	72,068		$	54,598		$	98,688		$	225,354

Note 7 – Mortgage Servicing Rights

The following table presents the changes in the Company’s mortgage servicing rights (“MSR”) for the three and six months ended June 30, 2011 and 2010:

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	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Balance, beginning of period	$	15,605		$	13,628		$	14,454		$	12,625
Additions for new mortgage servicing rights capitalized		1,073			938			2,407			2,008
Acquired mortgage servicing rights		-			-			-			62
Changes in fair value:
Due to changes in model inputs or assumptions(1)		(103	)		284			25			129
Other(2)		(225	)		(1,955	)		(536	)		(1,929	)
Balance, end of period	$	16,350		$	12,895		$	16,350		$	12,895

(1) Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.

(2) Represents changes due to collection/realization of expected cash flows over time.

Information related to our serviced loan portfolio as of June 30, 2011 and December 31, 2010 was as follows:

(dollars in thousands)

	June 30, 2011			December 31, 2010
Balance of loans serviced for others	$	1,751,700		$	1,603,414
MSR as a percentage of serviced loans		0.93	%		0.90	%

The amount of contractually specified servicing fees, late fees and ancillary fees earned, recorded in mortgage banking revenue on the Condensed Consolidated Statements of Operations, was $1.1 million and $2.3 million for the three and six months ended June 30, 2011, as compared to $933,000 and $1.8 million for the three and six months ended June 30, 2010.

Key assumptions used in measuring the fair value of MSR as of June 30, 2011 and December 31, 2010 were as follows:

	June 30, 2011			December 31, 2010
Constant prepayment rate		17.84	%		18.54	%
Discount rate		8.59	%		8.62	%
Weighted average life (years)		4.8			4.5

Note 8 – Non-covered Other Real Estate Owned

The following table presents the changes in non-covered other real estate owned (“OREO”) for the three and six months ended June 30, 2011 and 2010:

(in thousands)

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Balance, beginning of period	$	34,512		$	18,872		$	32,791		$	24,566
Additions to OREO		15,419			11,888			25,322			17,895
Dispositions of OREO		(12,134	)		(4,293	)		(18,186	)		(15,087	)
Valuation adjustments in the period		(3,388	)		(814	)		(5,518	)		(1,721	)
Balance, end of period	$	34,409		$	25,653		$	34,409		$	25,653

Note 9 – Junior Subordinated Debentures

The following is information about the Company’s wholly-owned trusts (“Trusts”) as of June 30, 2011:

38

(dollars in thousands)

Trust Name	Issue Date	Issued and Outstanding Amount		Carrying Value (1)		Rate (2)	Effective Rate (3)			Maturity Date	Redemption Date
AT FAIR VALUE:
Umpqua Statutory Trust II	October 2002	$	20,619	$	13,999	Floating (4)		11.62	%	October 2032	October 2007
Umpqua Statutory Trust III	October 2002		30,928		21,235	Floating (5)		11.62	%	November 2032	November 2007
Umpqua Statutory Trust IV	December 2003		10,310		6,551	Floating (6)		11.64	%	January 2034	January 2009
Umpqua Statutory Trust V	December 2003		10,310		6,540	Floating (6)		11.64	%	March 2034	March 2009
Umpqua Master Trust I	August 2007		41,238		20,733	Floating (7)		11.69	%	September 2037	September 2012
Umpqua Master Trust IB	September 2007		20,619		12,708	Floating (8)		11.65	%	December 2037	December 2012
			134,024		81,766
AT AMORTIZED COST:
HB Capital Trust I	March 2000		5,310		6,357	10.875%		8.20	%	March 2030	March 2010
Humboldt Bancorp Statutory Trust I	February 2001		5,155		5,916	10.200%		8.23	%	February 2031	February 2011
Humboldt Bancorp Statutory Trust II	December 2001		10,310		11,405	Floating (9)		3.00	%	December 2031	December 2006
Humboldt Bancorp Statutory Trust III	September 2003		27,836		30,670	Floating (10)		2.48	%	September 2033	September 2008
CIB Capital Trust	November 2002		10,310		11,241	Floating (5)		3.01	%	November 2032	November 2007
Western Sierra Statutory Trust I	July 2001		6,186		6,186	Floating (11)		3.85	%	July 2031	July 2006
Western Sierra Statutory Trust II	December 2001		10,310		10,310	Floating (9)		3.85	%	December 2031	December 2006
Western Sierra Statutory Trust III	September 2003		10,310		10,310	Floating (12)		3.18	%	September 2033	September 2008
Western Sierra Statutory Trust IV	September 2003		10,310		10,310	Floating (12)		3.18	%	September 2033	September 2008
			96,037		102,705
	Total	$	230,061	$	184,471

(1) Includes purchase accounting adjustments, net of accumulated amortization, for junior subordinated debentures assumed in connection with previous mergers as well as fair value adjustments related to trusts recorded at fair value.

(2) Contractual interest rate of junior subordinated debentures.

(3) Effective interest rate based upon the carrying value as of June 2011.

(4) Rate based on LIBOR plus 3.35%, adjusted quarterly.

(5) Rate based on LIBOR plus 3.45%, adjusted quarterly.

(6) Rate based on LIBOR plus 2.85%, adjusted quarterly.

(7) Rate based on LIBOR plus 1.35%, adjusted quarterly.

(8) Rate based on LIBOR plus 2.75%, adjusted quarterly.

(9) Rate based on LIBOR plus 3.60%, adjusted quarterly.

(10) Rate based on LIBOR plus 2.95%, adjusted quarterly.

(11) Rate based on LIBOR plus 3.58%, adjusted quarterly.

(12) Rate based on LIBOR plus 2.90%, adjusted quarterly.

The Trusts are reflected as junior subordinated debentures in the Condensed Consolidated Balance Sheets. The common stock issued by the Trusts is recorded in other assets in the Condensed Consolidated Balance Sheets, and totaled $6.9 million at June 30, 2011 and December 31, 2010.

On January 1, 2007, the Company selected the fair value measurement option for certain pre-existing junior subordinated debentures (the Umpqua Statutory Trusts). The remaining junior subordinated debentures as of the adoption date were acquired through business combinations and were measured at fair value at the time of acquisition. In 2007, the Company issued two series of trust preferred securities and elected to measure each instrument at fair value. Accounting for the junior subordinated debentures originally issued by the Company at fair value enables us to more closely align our financial performance with the economic value of those liabilities. Additionally, we believe it improves our ability to manage the market and interest rate risks associated with the junior subordinated debentures. The junior subordinated debentures measured at fair value and amortized cost are presented as separate line items on the balance sheet. The ending carrying (fair) value of the junior subordinated debentures measured at fair value represents the estimated amount that would be paid to transfer these liabilities in an orderly transaction amongst market participants under current market conditions as of the measurement date.

The significant inputs utilized in the estimation of fair value of these instruments are the credit risk adjusted spread and three month LIBOR. The credit risk adjusted spread represents the nonperformance risk of the liability, contemplating the inherent risk of the obligation. Generally, an increase in the credit risk adjusted spread and/or a decrease in the three month LIBOR will result in positive fair value adjustments. Conversely, a decrease in the credit risk adjusted spread and/or an increase in the three month LIBOR will result in negative fair value adjustments.

Through the first quarter of 2010 we obtained valuations from a third-party pricing service to assist with the estimation and determination of fair value of these liabilities. In these valuations, the credit risk adjusted interest spread for potential new issuances

39

through the primary market and implied spreads of these instruments when traded as assets on the secondary market, were estimated to be significantly higher than the contractual spread of our junior subordinated debentures measured at fair value. The difference between these spreads has resulted in the cumulative gain in fair value, reducing the carrying value of these instruments as reported on our Condensed Consolidated Balance Sheets. In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was signed into law which, among other things, limits the ability of certain bank holding companies to treat trust preferred security debt issuances as Tier 1 capital. This law may require many banks to raise new Tier 1 capital and is expected to effectively close the trust-preferred securities markets from offering new issuances in the future. As a result of this legislation, our third-party pricing service noted that they were no longer to able to provide reliable fair value estimates related to these liabilities given the absence of observable or comparable transactions in the market place in recent history or as anticipated into the future.

Due to inactivity in the junior subordinated debenture market and the inability to obtain observable quotes of our, or similar, junior subordinated debenture liabilities or the related trust preferred securities when traded as assets, we utilize an income approach valuation technique to determine the fair value of these liabilities using our estimation of market discount rate assumptions. The Company monitors activity in the trust preferred and related markets, to the extent available, changes related to the current and anticipated future interest rate environment, and considers our entity-specific creditworthiness, to validate the reasonableness of the credit risk adjusted spread and effective yield utilized in our discounted cash flow model. Additionally, the Company utilizes an external valuation firm to validate the reasonableness of the Company’s assessment of inputs that ultimately determines the estimated fair value of these liabilities. The Company has determined that the underlying inputs and assumptions have not materially changed since that last available third-party valuation.

Absent changes to the significant inputs utilized in the discounted cash flow model used to measure the fair value of these instruments at each reporting period, the cumulative discount for each junior subordinated debenture will reverse over time, ultimately returning the carrying values of these instruments to their notional values at their expected redemption dates, in a manner similar to the effective yield method as if these instruments were accounted for under the amortized cost method. This will result in recognizing losses on junior subordinated debentures carried at fair value on a quarterly basis within non-interest income. For the three and six months ended June 30, 2011 and 2010, we recorded a loss of $547,000 and $1.1 million and no gain and a gain of $6.1 million, respectively, resulting from the change in fair value of the junior subordinated debentures recorded at fair value. Observable activity in the junior subordinated debenture and related markets in future periods may change the effective rate used to discount these liabilities, and could result in additional fair value adjustments (gains or losses on junior subordinated debentures measured at fair value) outside the expected periodic change in fair value had the fair value assumptions remained unchanged.

As noted above, the Dodd-Frank Act limits the ability of certain bank holding companies to treat trust preferred security debt issuances as Tier 1 capital. As the Company had less than $15 billion in assets at December 31, 2009, under the Dodd-Frank Act, the Company will be able to continue to include its existing trust preferred securities, less the common stock of the Trusts, in Tier 1 capital. At June 30, 2011, the Company’s restricted core capital elements were 18% of total core capital, net of goodwill and any associated deferred tax liability.

Note 10 – Commitments and Contingencies

Lease Commitments — The Company leases 136 sites under non-cancelable operating leases. The leases contain various provisions for increases in rental rates, based either on changes in the published Consumer Price Index or a predetermined escalation schedule. Substantially all of the leases provide the Company with the option to extend the lease term one or more times following expiration of the initial term. In addition, in connection with the Nevada Security acquisition, the Company had the option to purchase one of the leased facilities, which was purchased in the second quarter of 2011.

Rent expense for the three and six months ended June 30, 2011 was $4.0 million and $8.2 million, respectively, compared to $3.8 million and $7.3 million, respectively, in the comparable periods in 2010. Rent expense was offset by rent income for the three and six months ended June 30, 2011 of $200,000 and $472,000, respectively, compared to $327,000 and $475,000, respectively, in the comparable periods in 2010.

Financial Instruments with Off-Balance-Sheet Risk — The Company’s financial statements do not reflect various commitments and contingent liabilities that arise in the normal course of the Bank’s business and involve elements of credit, liquidity, and interest rate risk.

The following table presents a summary of the Bank’s commitments and contingent liabilities:

40

(in thousands)

	As of June 30, 2011
Commitments to extend credit	$	1,199,041
Commitments to extend overdrafts	$	239,788
Forward sales commitments	$	106,000
Standby letters of credit	$	59,501
Commitments to originate loans held for sale	$	67,591

The Bank is a party to financial instruments with off-balance-sheet credit risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees. Those instruments involve elements of credit and interest-rate risk similar to the amounts recognized in the Condensed Consolidated Balance Sheets. The contract or notional amounts of those instruments reflect the extent of the Bank’s involvement in particular classes of financial instruments.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, and financial guarantees written, is represented by the contractual notional amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any covenant or condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. While most standby letters of credit are not utilized, a significant portion of such utilization is on an immediate payment basis. The Bank evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral varies but may include cash, accounts receivable, inventory, premises and equipment and income-producing commercial properties.

Standby letters of credit and financial guarantees written are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements, including international trade finance, commercial paper, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank holds cash, marketable securities, or real estate as collateral supporting those commitments for which collateral is deemed necessary. The Bank has not been required to perform on any financial guarantees and did not incur any losses in connection with standby letters of credit during the three and six months ended June 30, 2011 and 2010. At June 30, 2011, approximately $32.3 million of standby letters of credit expire within one year, and $27.2 million expire thereafter. Upon issuance, the Company recognizes a liability equivalent to the amount of fees received from the customer for these standby letter of credit commitments. Fees are recognized ratably over the term of the standby letter of credit. The estimated fair value of guarantees associated with standby letters of credit was $256,000 as of June 30, 2011.

At June 30, 2011 and December 31, 2010, the reserve for unfunded commitments, which is included in other liabilities on the Condensed Consolidated Balance Sheets, was $988,000 and $818,000, respectively. The adequacy of the reserve for unfunded commitments is reviewed on a quarterly basis, based upon changes in the amount of commitments, loss experience, and economic conditions.

Mortgage loans sold to investors may be sold with servicing rights retained, for which it makes only standard legal representations and warranties as to meeting certain underwriting and collateral documentation standards. In the past two years, the Bank has had to repurchase fewer than 10 loans due to deficiencies in underwriting or loan documentation and has not realized significant losses related to these repurchases. Management believes that any liabilities that may result from such recourse provisions are not significant.

Legal Proceedings - The Bank owns 468,659 shares of Class B common stock of Visa Inc. which are convertible into Class A common stock at a conversion ratio of 0.4881 per Class A share. As of June 30, 2011, the value of the Class A shares was $84.26 per share. Utilizing the conversion ratio, the value of unredeemed Class A equivalent shares owned by the Company was $19.3 million as of June 30, 2011, and has not been reflected in the accompanying financial statements. The shares of Visa Class B common stock are restricted and may not be transferred. Visa Member Banks are required to fund an escrow account to cover settlements, resolution of pending litigation and related claims. If the funds in the escrow account are insufficient to settle all the covered litigation, Visa may sell additional Class A shares, use the proceeds to settle litigation, and further reduce the conversion ratio. If funds remain in the escrow account after all litigation is settled, the Class B conversion ratio will be increased to reflect that surplus.

41

In the ordinary course of business, various claims and lawsuits are brought by and against the Company, the Bank and Umpqua Investments. In the opinion of management, there is no pending or threatened proceeding in which an adverse decision could result in a material adverse change in the Company’s consolidated financial condition or results of operations.

Concentrations of Credit Risk - The Company grants real estate mortgage, real estate construction, commercial, agricultural and installment loans and leases to customers throughout Oregon, Washington, California, and Nevada. In management’s judgment, a concentration exists in real estate-related loans, which represented approximately 80% of the Company’s non-covered loan and lease portfolio at June 30, 2011, and 82% at December 31, 2010. Commercial real estate concentrations are managed to assure wide geographic and business diversity. Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general, material increases in interest rates, changes in tax policies, tightening credit or refinancing markets, or a decline in real estate values in the Company’s primary market areas in particular, such as was seen with the deterioration in the residential development market since 2007, could have an adverse impact on the repayment of these loans. Personal and business incomes, proceeds from the sale of real property, or proceeds from refinancing, represent the primary sources of repayment for a majority of these loans.

The Bank recognizes the credit risks inherent in dealing with other depository institutions. Accordingly, to prevent excessive exposure to any single correspondent, the Bank has established general standards for selecting correspondent banks as well as internal limits for allowable exposure to any single correspondent. In addition, the Bank has an investment policy that sets forth limitations that apply to all investments with respect to credit rating and concentrations with an issuer.

Note 11 – Derivatives

The Company may use derivatives to hedge the risk of changes in the fair values of interest rate lock commitments, residential mortgage loans held for sale, and mortgage servicing rights. None of the Company’s derivatives are designated as hedging instruments. Rather, they are accounted for as free-standing derivatives, or economic hedges, with changes in the fair value of the derivatives reported in income. The Company primarily utilizes forward interest rate contracts in its derivative risk management strategy.

The Bank enters into forward delivery contracts to sell residential mortgage loans or mortgage-backed securities to broker/dealers at specific prices and dates (“MBS TBAs”) in order to hedge the interest rate risk in its portfolio of mortgage loans held for sale and its residential mortgage loan commitments. Credit risk associated with forward contracts is limited to the replacement cost of those forward contracts in a gain position. There were no counterparty default losses on forward contracts in the three and six months ended June 30, 2011 and 2010. Market risk with respect to forward contracts arises principally from changes in the value of contractual positions due to changes in interest rates. The Bank limits its exposure to market risk by monitoring differences between commitments to customers and forward contracts with broker/dealers. In the event the Company has forward delivery contract commitments in excess of available mortgage loans, the Company completes the transaction by either paying or receiving a fee to or from the broker/dealer equal to the increase or decrease in the market value of the forward contract. At June 30, 2011, the Bank had commitments to originate mortgage loans held for sale totaling $67.6 million and forward sales commitments of $106.0 million.

The Company’s mortgage banking derivative instruments do not have specific credit risk-related contingent features. The forward sales commitments do have contingent features that may require transferring collateral to the broker/dealers upon their request. However, this amount would be limited to the net unsecured loss exposure at such point in time and would not materially affect the Company’s liquidity or results of operations.

Effective in the second quarter of 2011, the Bank began executing interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting the interest rate swaps that the Bank executes with a third party, such that the Bank minimizes its net risk exposure. As of June 30, 2011, the Bank had 12 interest rate swaps with an aggregate notional amount of $86.3 million related to this program. During the three months ended June 30, 2011, the Bank recognized a net gain of $85,000 related to changes in the fair value of these swaps.

In connection with the interest rate swap program with commercial customers, the Bank has agreements with its derivative counterparties that contain a provision where if the Bank defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Bank could also be declared in default on its derivative obligations.

The Bank also has agreements with its derivative counterparties that contain a provision where if the Bank fails to maintain its status as a well/adequately capitalized institution, then the counterparty could terminate the derivative positions and the Bank would be required to settle its obligations under the agreements. Similarly, the Bank could be required to settle its obligations under certain of its agreements if specific regulatory events occur, such as if Bank were issued a prompt corrective action directive or a cease and desist order, or if certain regulatory ratios fall below specified levels.

As of June 30, 2011 the termination value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $1.4 million. The Bank has minimum collateral posting thresholds with certain of its derivative counterparties, and has been required to post collateral against its obligations under these agreements of $1.3 million as of June 30, 2011. If the Bank had breached any of these provisions at June 30, 2011, it could have been required to settle its obligations under the agreements at the termination value.

42

The following tables summarize the types of derivatives, separately by assets and liabilities, their locations on the Condensed Consolidated Balance Sheets, and the fair values of such derivatives as of June 30, 2011 and December 31, 2010:

(in thousands)

Derivatives not designated as hedging instrument	Balance Sheet Location	Asset Derivatives				Liability Derivatives
		June 30, 2011		December 31, 2010		June 30, 2011		December 31, 2010
Interest rate lock commitments	Other assets/Other liabilities	$	319	$	306	$	91	$	170
Interest rate forward sales commitments	Other assets/Other liabilities		272		754		124		191
Interest rate swaps	Other assets/Other liabilities		1,388		-		1,303		-
Total		$	1,979	$	1,060	$	1,518	$	361

The following table summarizes the types of derivatives, their locations within the Condensed Consolidated Statements of Operations, and the gains (losses) recorded during the three and six months ended June 30, 2011 and 2010:

(in thousands)

Derivatives not designated as hedging instrument	Income Statement Location	Three months ended June 30,				Six months ended June 30,
		2011		2010		2011		2010
Interest rate lock commitments	Mortgage banking revenue	$	(18)	$	1,040	$	92	$	1,207
Interest rate forward sales commitments	Mortgage banking revenue		(2,180)		(3,517)		(1,983)		(4,349)
Interest rate swaps	Other income		85		-		85		-
Total		$	(2,113)	$	(2,477)	$	(1,806)	$	(3,142)

Note 12 – Shareholders’ Equity

On February 3, 2010, the Company raised $303.6 million through a public offering by issuing 8,625,000 shares of the Company’s common stock, including 1,125,000 shares pursuant to the underwriters’ over-allotment option, at a share price of $11.00 per share and 18,975,000 depository shares, including 2,475,000 depository shares pursuant to the underwriter’s over-allotment option, also at a price of $11.00 per share. Fractional interests (1/100th) in each share of the Series B Common Stock Equivalent were represented by the 18,975,000 depositary shares; as a result, each depositary share would convert into one share of common stock. The net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were $288.1 million. The net proceeds from the offering were used to redeem the preferred stock issued to the United States Department of the Treasury (U.S. Treasury) under the Troubled Asset Relief Program (“TARP”) Capital Purchase Program (“CPP”), to fund FDIC-assisted acquisition opportunities and for general corporate purposes.

On February 17, 2010, the Company redeemed all of the outstanding Fixed Rate Cumulative Perpetual Preferred Stock, Series A, issued to the U.S. Treasury under the TARP CPP for an aggregate purchase price of $214.2 million. As a result of the repurchase of the Series A preferred stock, the Company incurred a one-time deemed dividend of $9.7 million due to the accelerated amortization of the remaining issuance discount on the preferred stock.

On March 31, 2010, the Company repurchased the common stock warrant issued to the U.S. Treasury pursuant to the TARP CPP, for $4.5 million. The warrant repurchase, together with the Company’s redemption in February 2010 of the entire amount of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, issued to the U.S. Treasury, represents full repayment of all TARP obligations and cancellation of all equity interests in the Company held by the U.S. Treasury.

On April 20, 2010, shareholders of the Company approved an amendment to the Company’s Restated Articles of Incorporation. The amendment, which became effective on April 21, 2010, increased the number of authorized shares of common stock to 200,000,000 (from 100,000,000). As a result of the effectiveness of the amendment, as of the close of business on April 21, 2010, the Company’s Series B Common Stock Equivalent preferred stock automatically converted into newly issued shares of common stock at a conversion rate of 100 shares of common stock for each share of Series B Common Stock Equivalent preferred stock. All shares of Series B Common Stock Equivalent preferred stock and representative depositary shares ceased to exist upon the conversion. Trading in the depositary shares on NASDAQ (ticker symbol “UMPQP”) ceased and the UMPQP symbol voluntarily delisted effective as of the close of business on April 21, 2010.

43

Stock-Based Compensation

The compensation cost related to stock options, restricted stock and restricted stock units (included in salaries and employee benefits) was $868,000 and $2.0 million for the three and six months ended June 30, 2011, respectively, as compared to $799,000 and $1.4 million for the three and six months ended June 30, 2010, respectively. The total income tax benefit recognized related to stock-based compensation was $347,000 and $795,000 for the three and six months ended June 30, 2011, respectively, as compared to $320,000 and $570,000 for the comparable periods in 2010, respectively.

On June 17, 2011, the Company’s Compensation Committee modified restricted stock awards and option grants that were issued to fourteen executive officers on January 31, 2011, as follows:

• Added performance vesting conditions linking total shareholder return, compared to the return of a regional bank stock total return index;

• Awards will cliff vest after three years instead of time vest over a four year period, but only to the extent that the performance conditions are met; and

• The modified grants will vest in whole or in part only if total shareholder return achieves specified targets, subject to prorated vesting upon death, disability, qualifying retirement, termination for good reason or a change of control.

As a result of the modification, there was no incremental compensation cost.

The following table summarizes information about stock option activity for the six months ended June 30, 2011:

(in thousands, except per share data)

	Six months ended June 30, 2011
	Options       Outstanding		Weighted-Avg     Exercise Price		Weighted-Avg   Remaining Contractual   Term (Years)		Aggregate     Intrinsic Value
Balance, beginning of period		2,067	$	14.82
Granted		237	$	11.01
Exercised		(40)	$	7.67
Forfeited/expired		(87)	$	15.62
Balance, end of period		2,177	$	14.50		6.00	$	1,692
Options exercisable, end of period		1,284	$	16.36		4.22	$	1,288

The total intrinsic value (which is the amount by which the stock price exceeded the exercise price on the date of exercise) of options exercised during the three and six months ended June 30, 2011 was $32,000 and $147,000, respectively. This compared to the total intrinsic value of options exercised during the three and six months ended June 30, 2010 of $93,000 and $382,000, respectively. During the three and six months ended June 30, 2011, the amount of cash received from the exercise of stock options was $97,000 and $309,000, respectively, as compared to $153,000 and $917,000 for the same periods in 2010, respectively.

The fair value of each option grant is estimated as of the grant date using the Black-Scholes option-pricing model. The following weighted average assumptions were used for stock options granted in the six months ended June 30, 2011 and 2010:

	Six months ended              June 30,
	2011		2010
Dividend yield		2.79%		2.73%
Expected life (years)		7.1		7.1
Expected volatility		52%		52%
Risk-free rate		2.71%		3.04%
Weighted average fair value of options on date of grant	$	4.65	$	5.18

The Company grants restricted stock periodically as a part of the 2003 Stock Incentive Plan for the benefit of employees. Restricted shares issued generally vest on an annual basis over five years. A deferred restricted stock award was granted to an executive in the second quarter of 2007. That award is now fully vested. The Company will issue certificates for the vested award within the seventh month following termination of the executive’s employment. The following table summarizes information about nonvested restricted share activity for the six months ended June 30, 2011:

44

(in thousands, except per share data)

	Six months ended June 30, 2011
	Restricted Shares         Outstanding		Weighted Average  Grant         Date Fair Value
Balance, beginning of period		401	$	15.29
Granted		279	$	11.02
Released		(68)	$	18.57
Forfeited/expired		(13)	$	13.31
Balance, end of period		599	$	12.98

The total fair value of restricted shares vested and released during the three and six months ended June 30, 2011 was $114,000 and $765,000, respectively. This compares to the total fair value of restricted shares vested and released during the three and six months ended June 30, 2010 of $51,000 and $538,000, respectively.

The Company grants restricted stock units as a part of the 2007 Long Term Incentive Plan for the benefit of certain executive officers. Restricted stock unit grants are subject to performance-based vesting as well as other approved vesting conditions. The total number of restricted stock units granted represents the maximum number of restricted stock units eligible to vest based upon the performance and service conditions set forth in the grant agreements. The following table summarizes information about restricted stock unit activity for the six months ended June 30, 2011:

(in thousands, except per share data)

	Six months ended June 30, 2011
	Restricted Stock Units         Outstanding		Weighted Average  Grant         Date Fair Value
Balance, beginning of period		225	$	11.13
Granted		105	$	10.42
Released		(63)	$	14.33
Forfeited/expired		(48)	$	14.33
Balance, end of period		219	$	9.17

No restricted stock units were vested and released during the three months ended June 30, 2010. The total fair value of restricted stock units vested and released during the six months ended June 30, 2011 was $677,000. This compares to the total fair value of restricted stock units vested and released during the three and six months ended June 30, 2010 of none and $213,000, respectively.

As of June 30, 2011, there was $3.2 million of total unrecognized compensation cost related to nonvested stock options which is expected to be recognized over a weighted-average period of 2.9 years. As of June 30, 2011, there was $4.6 million of total unrecognized compensation cost related to nonvested restricted stock which is expected to be recognized over a weighted-average period of 3.0 years. As of June 30, 2011, there was $1.0 million of total unrecognized compensation cost related to nonvested restricted stock units which is expected to be recognized over a weighted-average period of 1.6 years, assuming expected performance conditions are met.

For the three and six months ended June 30, 2011, the Company received income tax benefits of $58,000 and $633,000, respectively, related to the exercise of non-qualified employee stock options, disqualifying dispositions on the exercise of incentive stock options, the vesting of restricted shares and the vesting of restricted stock units. For the three and six months ended June 30, 2010, the Company received income tax benefits of $54,000 and $380,000, respectively. In the six months ended June 30, 2011, the Company had net tax deficiencies (tax deficiency resulting from tax deductions less than the compensation cost recognized) of $251,000, compared to net tax deficiencies of $205,000 for the six months ended June 30, 2010. Only cash flows from gross excess tax benefits are classified as financing cash flows.

Note 13 – Income Taxes

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, as well as the Oregon and California state jurisdictions. Except for the California amended returns of an acquired institution for the tax years 2001, 2002, and 2003, and only as it relates to the net interest deduction taken on these amended returns, the Company is no longer subject to U.S. federal or Oregon state tax authority examinations for years before 2007 and California state tax authority examinations for years before 2004. During 2010, the Internal Revenue Service concluded an examination of the Company’s U.S. income tax returns through 2008. The results of these examinations had no significant impact on the Company’s financial statements.

45

Income taxes are accounted for using the asset and liability method. Under this method a deferred tax asset or liability is determined based on the enacted tax rates which will be in effect when the differences between the financial statement carrying amounts and tax basis of existing assets and liabilities are expected to be reported in the Company’s income tax returns. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established to reduce the net carrying amount of deferred tax assets if it is determined to be more likely than not, that all or some portion of the potential deferred tax asset will not be realized.

The Company applies the provisions of FASB ASC 740, Income Taxes, relating to the accounting for uncertainty in income taxes. The Company periodically reviews its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This review takes into consideration the status of current taxing authorities’ examinations of the Company’s tax returns, recent positions taken by the taxing authorities on similar transactions, if any, and the overall tax environment.

The Company recorded a reduction in its liability for unrecognized tax benefits relating to temporary differences settled during audit in 2010. The Company had gross unrecognized tax benefits relating to California tax incentives of $555,000 recorded as of June 30, 2011. If recognized, the unrecognized tax benefit would reduce the 2011 annual effective tax rate by 0.4%. During the first six months of 2011, the Company recognized an expense of $6,000 in interest relating to its liability for unrecognized tax benefits during the same period. Interest expense is reported by the Company as a component of tax expense. As of June 30, 2011, the accrued interest related to unrecognized tax benefits is $177,000.

Note 14 – Earnings Per Common Share

Nonvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and are included in the computation of EPS pursuant to the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Certain of the Company’s nonvested restricted stock awards qualify as participating securities.

Net earnings, less any preferred dividends accumulated for the period (whether or not declared), is allocated between the common stock and participating securities pursuant to the two-class method. Basic earnings per common share is computed by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding during the period, excluding participating nonvested restricted shares.

Diluted earnings per common share is computed in a similar manner, except that first the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares, excluding the participating securities, were issued using the treasury stock method. For all periods presented, warrants, stock options, certain restricted stock awards and restricted stock units are the only potentially dilutive non-participating instruments issued by the Company. Next, we determine and include in diluted earnings per common share calculation the more dilutive effect of the participating securities using the treasury stock method or the two-class method. Undistributed losses are not allocated to the nonvested share-based payment awards (the participating securities) under the two-class method as the holders are not contractually obligated to share in the losses of the Company.

The following is a computation of basic and diluted earnings (loss) per common share for the three and six months ended June 30, 2011 and 2010:

46

(in thousands, except per share data)

	Three months ended     June  30,				Six months ended     June 30,
	2011		2010		2011		2010
NUMERATORS:
Net income	$	17,785	$	3,463	$	31,252	$	11,977
Less:
Preferred stock dividends		-		-		-		12,192
Dividends and undistributed earnings allocated to participating securities (1)		86		16		148		31
Net earnings (loss) available to common shareholders	$	17,699	$	3,447	$	31,104	$	(246)
DENOMINATORS:
Weighted average number of common shares outstanding - basic		114,611		110,135		114,593		101,205
Effect of potentially dilutive common shares (2)		174		220		203		230
Preferred convertible stock		-		4,378		-		-
Weighted average number of common shares outstanding - diluted		114,785		114,733		114,796		101,435
EARNINGS (LOSS) PER COMMON SHARE:
Basic	$	0.15	$	0.03	$	0.27	$	-
Diluted	$	0.15	$	0.03	$	0.27	$	-

(1) Represents dividends paid and undistributed earnings allocated to nonvested restricted stock awards.

(2) Represents the effect of the assumed exercise of warrants, assumed exercise of stock options, vesting of non-participating restricted shares, and vesting of restricted stock units, based on the treasury stock method.

The following table presents the weighted average outstanding securities that were not included in the computation of diluted earnings per common share because their effect would be anti-dilutive for the three and six months ended June 30, 2011 and 2010.

(in thousands)

	Three months ended     June  30,				Six months ended     June 30,
	2011		2010		2011		2010
Stock options		1,859		1,287		1,833		1,233
CPP warrant		-		-		-		552
Non-participating, nonvested restricted shares		-		10		-		11
Restricted stock units		-		-		-		-
		1,859		1,297		1,833		1,796

Note 15 – Segment Information

The Company operates three primary segments: Community Banking, Mortgage Banking and Wealth Management. The Community Banking segment’s principal business focus is the offering of loan and deposit products to business and retail customers in its primary market areas. As of June 30, 2011, the Community Banking segment operated 184 locations throughout Oregon, Northern California, Washington, and Nevada.

The Mortgage Banking segment, which operates as a division of the Bank, originates, sells and services residential mortgage loans.

The Wealth Management segment consists of the operations of Umpqua Investments, which offers a full range of retail brokerage services and products to its clients who consist primarily of individual investors, and Umpqua Private Bank, which serves high net worth individuals with liquid investable assets and provides customized financial solutions and offerings, and Umpqua Financial Advisors. The Company accounts for intercompany fees and services between Umpqua Investments and the Bank at estimated fair value according to regulatory requirements for services provided. Intercompany items relate primarily to management services, referral fees and deposit rebates.

Prior to January 1, 2011, the Company reported Retail Brokerage, consisting of Umpqua Investments, as its own segment. Effective in 2011, the Company began reporting Umpqua Investments, Umpqua Private Bank, and Umpqua Financial Advisors under the Wealth Management segment. Umpqua Private Bank and Umpqua Financial Advisors do not meet the quantitative thresholds for reporting as separate segments and service the same customer base on Umpqua Investments. As a result of the change in reportable segment, prior periods have been adjusted in the financial information below.

Summarized financial information concerning the Company’s reportable segments and the reconciliation to the consolidated financial results is shown in the following tables:

47

Segment Information

(in thousands)

	Three Months Ended June 30, 2011
	Community Banking		Wealth Management		Mortgage Banking		Consolidated
Interest income	$	121,953	$	3,304	$	3,160	$	128,417
Interest expense		18,019		465		572		19,056
Net interest income		103,934		2,839		2,588		109,361
Provision for non-covered loan and lease losses		15,459		-		-		15,459
Provision for covered loan and lease losses		3,755		-		-		3,755
Non-interest income		11,092		3,671		4,864		19,627
Non-interest expense		74,952		3,941		4,314		83,207
Income before income taxes		20,860		2,569		3,138		26,567
Provision for income taxes		6,381		1,146		1,255		8,782
Net income		14,479		1,423		1,883		17,785
Dividends and undistributed earnings allocated to participating securities		86		-		-		86
Net earnings available to common shareholders	$	14,393	$	1,423	$	1,883	$	17,699
	Six Months Ended June 30, 2011
	Community Banking		Wealth Management		Mortgage Banking		Consolidated
Interest income	$	241,010	$	5,771	$	6,528	$	253,309
Interest expense		36,831		1,045		1,170		39,046
Net interest income		204,179		4,726		5,358		214,263
Provision for non-covered loan losses		30,489		-		-		30,489
Provision for covered loan losses		11,023		-		-		11,023
Non-interest income		23,768		7,267		10,177		41,212
Non-interest expense		150,711		8,043		8,654		167,408
Income before income taxes		35,724		3,950		6,881		46,555
Provision for income taxes		11,174		1,377		2,752		15,303
Net income		24,550		2,573		4,129		31,252
Dividends and undistributed earnings allocated to participating securities		148		-		-		148
Net earnings available to common shareholders	$	24,402	$	2,573	$	4,129	$	31,104

48

	Three Months Ended June 30, 2010
	Community Banking		Wealth Management		Mortgage Banking		Consolidated
Interest income	$	110,109	$	2,427	$	3,068	$	115,604
Interest expense		22,360		307		637		23,304
Net interest income		87,749		2,120		2,431		92,300
Provision for non-covered loan and lease losses		29,767		-		-		29,767
Provision for covered loan and lease losses		-		-		-		-
Non-interest income		11,771		3,540		3,252		18,563
Non-interest expense		67,332		4,087		3,414		74,833
Income (loss) before income taxes		2,421		1,573		2,269		6,263
Provision (benefit from) for income taxes		1,374		519		907		2,800
Net income (loss)		1,047		1,054		1,362		3,463
Preferred stock dividends		-		-		-		-
Dividends and undistributed earnings allocated to participating securities		16		-		-		16
Net earnings (loss) available to common shareholders	$	1,031	$	1,054	$	1,362	$	3,447
	Six Months Ended June 30, 2010
	Community Banking		Wealth Management		Mortgage Banking		Consolidated
Interest income	$	214,209	$	4,821	$	5,943	$	224,973
Interest expense		43,687		602		1,332		45,621
Net interest income		170,522		4,219		4,611		179,352
Provision for non-covered loan losses		71,873		-		-		71,873
Provision for covered loan losses		-		-		-		-
Non-interest income		35,218		6,631		6,761		48,610
Non-interest expense		130,362		7,863		6,479		144,704
Income (loss) before income taxes		3,505		2,987		4,893		11,385
(Benefit from) provision for income taxes		(3,504)		955		1,957		(592)
Net income (loss)		7,009		2,032		2,936		11,977
Preferred stock dividends		12,192		-		-		12,192
Dividends and undistributed earnings allocated to participating securities		31		-		-		31
Net (loss) earnings available to common shareholders	$	(5,214)	$	2,032	$	2,936	$	(246)
	June 30, 2011
	Community Banking		Wealth Management		Mortgage Banking		Consolidated
Total assets	$	11,092,529	$	48,885	$	318,278	$	11,459,692
Total loans and leases (covered and non-covered)	$	6,161,711	$	34,514	$	238,004	$	6,434,229
Total deposits	$	8,859,870	$	267,037	$	19,505	$	9,146,412
	December 31, 2010
	Community Banking		Wealth Management		Mortgage Banking		Consolidated
Total assets	$	11,314,681	$	37,757	$	316,272	$	11,668,710
Total loans and leases (covered and non-covered)	$	6,198,532	$	23,631	$	222,722	$	6,444,885
Total deposits	$	9,160,058	$	262,148	$	11,599	$	9,433,805

Note 16 – Fair Value Measurement

The following table presents estimated fair values of the Company’s financial instruments as of June 30, 2011 and December 31, 2010, whether or not recognized or recorded at fair value in the Condensed Consolidated Balance Sheets:

49

(in thousands)

	June 30, 2011				December 31, 2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
FINANCIAL ASSETS:
Cash and cash equivalents	$	615,882	$	615,882	$	1,004,125	$	1,004,125
Trading securities		2,522		2,522		3,024		3,024
Securities available for sale		3,177,460		3,177,460		2,919,180		2,919,180
Securities held to maturity		5,553		5,733		4,762		4,774
Loans held for sale		60,416		60,416		75,626		75,626
Non-covered loans and leases, net		5,637,758		5,691,951		5,557,066		5,767,506
Covered loans and leases, net		698,676		783,045		785,898		893,682
Restricted equity securities		32,839		32,839		34,475		34,475
Mortgage servicing rights		16,350		16,350		14,454		14,454
Bank owned life insurance assets		91,169		91,169		90,161		90,161
FDIC indemnification asset		116,928		63,211		146,413		90,011
Derivatives		1,979		1,979		1,060		1,060
Visa Class B common stock		-		18,311		-		15,987
FINANCIAL LIABILITIES:
Deposits	$	9,146,412	$	9,149,607	$	9,433,805	$	9,464,406
Securities sold under agreements to repurchase		120,889		120,889		73,759		73,759
Term debt		256,719		278,406		262,760		282,127
Junior subordinated debentures, at fair value		81,766		81,766		80,688		80,688
Junior subordinated debentures, at amortized cost		102,705		66,799		102,866		65,771
Derivatives		1,518		1,518		361		361

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 and December 31, 2010:

(in thousands)

	Fair Value at June 30, 2011
Description	Total		Level 1		Level 2		Level 3
Trading securities
Obligations of states and political subdivisions	$	501	$	501	$	-	$	-
Equity securities		1,926		1,926		-		-
Other investments securities(1)		95		95		-		-
Available for sale securities
U.S. Treasury and agencies		118,953		-		118,953		-
Obligations of states and political subdivisions		222,898		-		222,898		-
Residential mortgage-backed securities and collateralized mortgage obligations		2,833,429		-		2,833,429		-
Other debt securities		150		-		150		-
Investments in mutual funds and other equity securities		2,030		-		2,030		-
Mortgage servicing rights, at fair value		16,350		-		-		16,350
Derivatives		1,979		-		1,979		-
Total assets measured at fair value	$	3,198,311	$	2,522	$	3,179,439	$	16,350
Junior subordinated debentures, at fair value		81,766		-		-		81,766
Derivatives		1,518		-		1,518		-
Total liabilities measured at fair value	$	83,284	$	-	$	1,518	$	81,766

50

(in thousands)

	Fair Value at December 31, 2010
Description	Total		Level 1		Level 2		Level 3
Trading securities
Obligations of states and political subdivisions	$	1,282	$	1,282	$	-	$	-
Equity securities		1,645		1,645		-		-
Other investments securities(1)		97		97		-		-
Available for sale securities
U.S. Treasury and agencies		118,789		-		118,789		-
Obligations of states and political subdivisions		216,726		-		216,726		-
Residential mortgage-backed securities and collateralized mortgage obligations		2,581,504		-		2,581,504		-
Other debt securities		152		-		152		-
Investments in mutual funds and other equity securities		2,009		-		2,009		-
Mortgage servicing rights, at fair value		14,454		-		-		14,454
Derivatives		1,060		-		1,060		-
Total assets measured at fair value	$	2,937,718	$	3,024	$	2,920,240	$	14,454
Junior subordinated debentures, at fair value	$	80,688	$	-	$	-	$	80,688
Derivatives		361		-		361		-
Total liabilities measured at fair value	$	81,049	$	-	$	361	$	80,688

(1) Principally represents U.S. Treasury and agencies or residential mortgage-backed securities issued or guaranteed by governmental agencies.

The following methods were used to estimate the fair value of each class of financial instrument above:

Cash and Cash Equivalents - For short-term instruments, including cash and due from banks, and interest bearing deposits with banks, the carrying amount is a reasonable estimate of fair value.

Securities - Fair values for investment securities are based on quoted market prices when available or through the use of alternative approaches, such as matrix or model pricing, or broker indicative bids, when market quotes are not readily accessible or available.

Loans Held For Sale - For loans held for sale, carrying value approximates fair value.

Non-covered Loans and Leases - Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type, including commercial, real estate and consumer loans. Each loan category is further segregated by fixed and variable rate. For variable rate loans, carrying value approximates fair value. Effective in the second quarter of 2010, the fair value of fixed rate loans is calculated by discounting contractual cash flows at rates which similar loans are currently being made. These amounts are discounted further by embedded probable losses expected to be realized in the portfolio.

Covered Loans and Leases - Covered loans are initially measured at their estimated fair value on their date of acquisition as described in Note 6. Subsequent to acquisition, the fair value of covered loans is measured using the same methodology as that of non-covered loans.

Restricted Equity Securities - The carrying value of restricted equity securities approximates fair value as the shares can only be redeemed by the issuing institution at par.

Mortgage Servicing Rights - The fair value of mortgage servicing rights is estimated using a discounted cash flow model. Assumptions used include market discount rates, anticipated prepayment speeds, delinquency and foreclosure rates, and ancillary fee income. This model is periodically validated by an independent external model validation group. The model assumptions and the MSR fair value estimates are also compared to observable trades of similar portfolios as well as to MSR broker valuations and industry surveys, as available. Management believes the significant inputs utilized are indicative of those that would be used by market participants.

Bank Owned Life Insurance Assets - Fair values of insurance policies owned are based on the insurance contract’s cash surrender value.

51

FDIC Indemnification Asset -The FDIC indemnification asset is calculated as the expected future cash flows under the loss-share agreement discounted by a rate reflective of the creditworthiness of the FDIC as would be required from the market.

Visa Class B Common Stock - The fair value of Visa Class B common stock is estimated by applying a 5% discount to the value of the unredeemed Class A equivalent shares. The discount primarily represents the risk related to the further potential reduction of the conversion ratio between Class B and Class A shares and a liquidity risk premium.

Deposits - The fair value of deposits with no stated maturity, such as non-interest bearing deposits, savings and interest checking accounts, and money market accounts, is equal to the amount payable on demand as of June 30, 2011 and December 31, 2010. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.

Securities Sold under Agreements to Repurchase and Federal Funds Purchased - For short-term instruments, including securities sold under agreements to repurchase and federal funds purchased, the carrying amount is a reasonable estimate of fair value.

Term Debt - The fair value of medium term notes is calculated based on the discounted value of the contractual cash flows using current rates at which such borrowings can currently be obtained.

Junior Subordinated Debentures - The fair value of junior subordinated debentures is estimated using an income approach valuation technique. The ending carrying (fair) value of the junior subordinated debentures measured at fair value represents the estimated amount that would be paid to transfer these liabilities in an orderly transaction amongst market participants. Due to credit concerns in the capital markets and inactivity in the trust preferred markets that have limited the observability of market spreads, we have classified this as a Level 3 fair value measure.

Derivative Instruments - The fair value of the derivative instruments is estimated using quoted or published market prices for similar instruments, adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate.

The following table provides a reconciliation of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and six months ended June 30, 2011 and 2010.

(in thousands)

Three months ended June 30,	Beginning Balance		Change included in earnings			Purchases and issuances		Sales and settlements			Ending Balance		Net change in unrealized gains or (losses) relating to items held at end of period
2011
Mortgage servicing rights	$	15,605	$	(328	)	$	1,073	$	-		$	16,350	$	(45	)
Junior subordinated debentures		81,220		1,523			-		(977	)		81,766		1,523
2010
Mortgage servicing rights	$	13,628	$	(1,671	)	$	938	$	-		$	12,895	$	(1,368	)
Junior subordinated debentures		79,563		984			-		(957	)		79,590		984

(in thousands)

Six months ended June 30,	Beginning Balance		Change included in earnings			Purchases, issuances and settlements		Sales and settlements			Ending Balance		Net change in unrealized gains or (losses) relating to items held at end of period
2011
Mortgage servicing rights	$	14,454	$	(511	)	$	2,407	$	-		$	16,350	$	79
Junior subordinated debentures		80,688		3,033			-		(1,955	)		81,766		3,033
2010
Mortgage servicing rights	$	12,625	$	(1,800	)	$	2,070	$	-		$	12,895	$	(1,263	)
Junior subordinated debentures		85,666		(4,150	)		-		(1,926	)		79,590		(4,150	)

Gains (losses) on mortgage servicing rights carried at fair value are recorded in mortgage banking revenue within other non-interest income. Gains (losses) on junior subordinated debentures carried at fair value within other non-interest income. The contractual interest expense on the junior subordinated debentures is recorded on an accrual basis as interest on junior subordinated debentures within interest expense. Settlements related to the junior subordinated debentures represent the payment of accrued interest that is embedded in the fair value of these liabilities.

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Management believes that the credit risk adjusted spread being utilized is indicative of the nonperformance risk premium a willing market participant would require under current market conditions, that is, the inactive market. Management attributes the change in fair value of the junior subordinated debentures during the period to market changes in the nonperformance expectations and pricing of this type of debt, and not as a result of changes to our entity-specific credit risk. The widening of the credit risk adjusted spread above the Company’s contractual spreads has primarily contributed to the positive fair value adjustments. Future contractions in the credit risk adjusted spread relative to the spread currently utilized to measure the Company’s junior subordinated debentures at fair value as of June 30, 2011, or the passage of time, will result in negative fair value adjustments. Generally, an increase in the credit risk adjusted spread and/or a decrease in the three month LIBOR swap curve will result in positive fair value adjustments. Conversely, a decrease in the credit risk adjusted spread and/or an increase in the three month LIBOR swap curve will result in negative fair value adjustments.

Additionally, from time to time, certain assets are measured at fair value on a nonrecurring basis. These adjustments to fair value generally result from the application of lower-of-cost-or-market accounting or write-downs of individual assets due to impairment. The following table presents information about the Company’s assets and liabilities measured at fair value on a nonrecurring basis for which a nonrecurring change in fair value has been recorded during the reporting period. The amounts disclosed below represent the fair values at the time the nonrecurring fair value measurements were made, and not necessarily the fair value as of the dates reported upon.

(in thousands)

	June 30, 2011
Description	Total		Level 1		Level 2		Level 3
Investment securities, held to maturity
Residential mortgage-backed securities and collateralized mortgage obligations	$	217	$	-	$	-	$	217
Non-covered loans and leases		51,968		-		-		51,968
Non-covered other real estate owned		7,270		-		-		7,270
Covered other real estate owned		5,963		-		-		5,963
	$	65,418	$	-	$	-	$	65,418
	December 31, 2010
Description	Total		Level 1		Level 2		Level 3
Investment securities, held to maturity
Residential mortgage-backed securities and collateralized mortgage obligations	$	1,226	$	-	$	-	$	1,226
Non-covered loans and leases		74,639		-		-		74,639
Non-covered other real estate owned		7,958		-		-		7,958
Covered other real estate owned		8,708						8,708
	$	92,531	$	-	$	-	$	92,531

The following table presents the losses resulting from nonrecurring fair value adjustments for the three and six months ended June 30, 2011 and 2010:

(in thousands)

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Investment securities, held to maturity
Residential mortgage-backed securities and collateralized mortgage obligations	$	47	$	-	$	72	$	289
Non-covered loans and leases		17,278		31,449		33,194		64,589
Non-covered other real estate owned		3,388		814		5,518		1,721
Covered other real estate owned		665		-		1,921		-
Total loss from nonrecurring measurements	$	21,378	$	32,263	$	40,705	$	66,599

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The investment securities held to maturity above relate to non-agency collateralized mortgage obligations where other-than-temporary impairment (“OTTI”) has been identified and the investments have been adjusted to fair value. The fair value of these investments securities were obtained from third-party pricing services using matrix or model pricing methodologies and were corroborated by broker indicative bids. While we do not expect to recover the entire amortized cost basis of these securities, as we as we do not intend to sell these securities and it is not likely that we will be required to sell these securities before maturity, only the credit loss component of the impairment is recognized in earnings. The credit loss on a security is measured as the difference between the amortized cost basis and the present value of the cash flows expected to be collected. The remaining impairment loss related to all other factors, the difference between the present value of the cash flows expected to be collected and fair value, is recognized as a charge to a separate component other comprehensive income (“OCI”). We estimate the cash flows of the underlying collateral within each security considering credit, interest and prepayment risk models that incorporate management’s estimate of projected key assumptions including prepayment rates, collateral default rates and loss severity. Assumptions utilized vary from security to security, and are influenced by factors such as loan interest rates, geographic location, borrower characteristics and vintage, and historical experience. We then use a third party to obtain information about the structure of each security, including subordination and other credit enhancements, in order to determine how the underlying collateral cash flows will be distributed to each security issued in the structure. These cash flows are then discounted at the interest rate used to recognize interest income on each security.

The non-covered loans and leases amount above represents impaired, collateral dependent loans that have been adjusted to fair value. When we identify a collateral dependent loan as impaired, we measure the impairment using the current fair value of the collateral, less selling costs. Depending on the characteristics of a loan, the fair value of collateral is generally estimated by obtaining external appraisals. If we determine that the value of the impaired loan is less than the recorded investment in the loan, we recognize this impairment and adjust the carrying value of the loan to fair value through the allowance for loan and lease losses. The loss represents charge-offs or impairments on collateral dependent loans for fair value adjustments based on the fair value of collateral. The carrying value of loans fully charged-off is zero.

The non-covered and covered other real estate owned amount above represents impaired real estate that has been adjusted to fair value. Non-covered other real estate owned represents real estate which the Bank has taken control of in partial or full satisfaction of loans. At the time of foreclosure, other real estate owned is recorded at the lower of the carrying amount of the loan or fair value less costs to sell, which becomes the property’s new basis. Any write-downs based on the asset’s fair value at the date of acquisition are charged to the allowance for loan and lease losses. After foreclosure, management periodically performs valuations such that the real estate is carried at the lower of its new cost basis or fair value, net of estimated costs to sell. Fair value adjustments on other real estate owned are recognized within net loss on real estate owned. The loss represents impairments on non-covered other real estate owned for fair value adjustments based on the fair value of the real estate.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Report contains certain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. These statements may include statements that expressly or implicitly predict future results, performance or events. Statements other than statements of historical fact are forward-looking statements. You can find many of these statements by looking for words such as “anticipates,” “expects,” “believes,” “estimates” and “intends” and words or phrases of similar meaning. We make forward-looking statements regarding projected sources of funds, use of proceeds, availability of acquisition and growth opportunities, dividends, adequacy of our allowance for loan and lease losses and provision for loan and lease losses, our commercial real estate portfolio and subsequent chargeoffs. Forward-looking statements involve substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control. There are many factors that could cause actual results to differ materially from those contemplated by these forward-looking statements. Risks and uncertainties include those set forth in our filings with the SEC, and the following factors that might cause actual results to differ materially from those presented:

• our ability to attract new deposits and loans and leases;

• demand for financial services in our market areas;

• competitive market pricing factors;

• deterioration in economic conditions that could result in increased loan and lease losses;

• risks associated with concentrations in real estate related loans;

• market interest rate volatility;

• stability of funding sources and continued availability of borrowings;

• changes in legal or regulatory requirements or the results of regulatory examinations that could restrict growth;

• our ability to recruit and retain key management and staff;

• availability of, and competition for, FDIC-assisted and other acquisition opportunities;

• risks associated with merger and acquisition integration;

• significant decline in the market value of the Company that could result in an impairment of goodwill;

• our ability to raise capital or incur debt on reasonable terms;

• regulatory limits on the Bank’s ability to pay dividends to the Company;

• the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and related rules and regulations on the Company’s business operations and competitiveness, including the impact of executive compensation restrictions, which may affect the Company’s ability to retain and recruit executives in competition with firms in other industries who do not operate under those restrictions;

• the impact of the Dodd-Frank Act on the Company’s interchange fee revenue, interest expense, FDIC deposit insurance assessments and regulatory compliance expenses, which include the following adopted final rules:

• Effective October 1, 2011, the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction is the sum of $0.21 per transaction plus 5 basis points multiplied by the value of the transaction. The rule allows for an upward adjustment of no more than $0.01 if the issuer develops and implements policies and procedures reasonably designed to achieve fraud-prevention standards. This represents an approximate 50% decrease in interchange revenue on an average transaction.

• Effective July 21, 2011, Regulation Q, which prohibited the payment of interest on demand deposit account, was repealed and we anticipate that this will result in increased interest expense.

There are many factors that could cause actual results to differ materially from those contemplated by these forward-looking statements. We do not intend to update these forward-looking statements. Readers should consider any forward-looking statements in light of this explanation, and we caution readers about relying on forward-looking statements.

General

Umpqua Holdings Corporation (referred to in this report as “we,” “our,” “Umpqua,” and “the Company”), an Oregon corporation, is a financial holding company with two principal operating subsidiaries, Umpqua Bank (the “Bank”) and Umpqua Investments, Inc. (“Umpqua Investments”).

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Our headquarters are located in Portland, Oregon, and we engage primarily in the business of commercial and retail banking and the delivery of retail brokerage services. The Bank provides a wide range of banking, mortgage banking and other financial services to corporate, institutional and individual customers. Along with our subsidiaries, we are subject to the regulations of state and federal agencies and undergo periodic examinations by these regulatory agencies.

We are considered one of the most innovative community banks in the United States, with a strategy that combines a retail product delivery approach with an emphasis on quality-assured personal service. The Bank has evolved from a traditional community bank into a community-oriented financial services retailer by implementing a variety of retail marketing strategies to increase revenue and differentiate ourselves from our competition.

Umpqua Investments is a registered broker-dealer and investment advisor with offices in Portland, Lake Oswego, and Medford, Oregon, Santa Rosa, California, and in many Umpqua Bank stores. The firm is one of the oldest investment companies in the Northwest and is active in many community events. Umpqua Investments offers a full range of investment products and services including: stocks, fixed income securities (municipal, corporate, and government bonds, CDs, and money market instruments), mutual funds, annuities, options, retirement planning, money management services, and life insurance.

Executive Overview

Significant items for the second quarter of 2011 were as follows:

• Net earnings available to common shareholders per diluted common share were $0.15 and $0.27 for the three and six months ended June 30, 2011, as compared to net earnings available to common shareholders per diluted common share of $0.03 and $0.00 for the three and six months ended June 30, 2010. Operating earnings per diluted common share, defined as earnings available to common shareholders before net gains or losses on junior subordinated debentures carried at fair value, net of tax, bargain purchase gains, net of tax, and merger related expenses, net of tax, divided by the same diluted share total used in determining diluted earnings per common share, was $0.16 and $0.28 for the three and six months ended June 30, 2011, as compared to operating earnings (loss) per diluted common share of $0.04 and $(0.05) for the three and six months ended June 30, 2010. Operating earnings (loss) per diluted share is considered a “non-GAAP” financial measure. More information regarding this measurement and reconciliation to the comparable GAAP measurement is provided under the heading Results of Operations - Overview below.

• Net interest margin, on a tax equivalent basis, increased to 4.32% and 4.25% for the three and six months ended June 30, 2011, compared to 4.05% and 4.05% for the same periods a year ago. The increase in net interest margin resulted from investment of excess interest bearing cash into the investment portfolio, increasing covered loans outstanding, increased yields on the covered loan portfolio, and declining costs of interest bearing deposits, partially offset by a decline in non-covered loans outstanding.

• The provision for non-covered loan and lease losses was $15.5 million and $30.5 million for the three and six months ended June 30, 2011, as compared to the $29.8 million and $71.9 million recognized for the three and six months ended June 30, 2010. This resulted from a decrease in net charge-offs and non-performing loans.

• Mortgage banking revenue was $4.8 million and $10.1 million for the three and six months ended June 30, 2011, compared to $3.2 million and $6.7 million for the three and six months ended June 30, 2010. Closed mortgage volume increased 29% in the current year-to-date over the prior year same period due to an increase in purchase and refinancing activity.

• Total gross non-covered loans and leases were $5.7 billion as of June 30, 2011, an increase of $76.6 million as compared to December 31, 2010. This increase is principally attributable to loan production, primarily related to the commercial and industrial segment of the portfolio, offset by charge-offs and transfers to other real estate owned during the period.

• Total deposits were $9.1 billion as of June 30, 2011, a decrease of $287.4 million, or 3%, as compared to December 31, 2010. Despite the decline in total deposits, non-interest bearing deposits increased $117.0 million, or 7%, as compared to December 31, 2010.

• Total consolidated assets were $11.5 billion as of June 30, 2011, representing a decrease from the $11.7 billion at December 31, 2010. The decrease is attributable to the decrease in total loans and total deposits.

• Non-covered, non-performing assets decreased to $157.4 million, or 1.37% of total assets, as of June 30, 2011, as compared to $178.0 million, or 1.53% of total assets, as of December 31, 2010. Non-covered, non-performing loans decreased to $123.0 million, or 2.14% of total non-covered loans, as of June 30, 2011, as compared to $145.2 million, or 2.57% of total non-covered loans as of December 31, 2010. Non-accrual loans have been written-down to their estimated net realizable values.

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• Net charge-offs on non-covered loans were $15.5 million for the three months ended June 30, 2011, or 1.10% of average non-covered loans and leases (annualized), as compared to net charge-offs of $26.6 million, or 1.84% of average non-covered loans and leases (annualized), for the three months ended June 30, 2010. Net charge-offs on non-covered loans were $34.6 million for the six months ended June 30, 2011, or 1.24% of average non-covered loans and leases (annualized), as compared to net charge-offs of $65.6 million, or 2.26% of average non-covered loans and leases (annualized), for the six months ended June 30, 2010.

• Total risk based capital decreased to 17.48% as of June 30, 2011, compared to 17.62% as of December 31, 2010, due to the increase in risk-weighted assets during the quarter.

• Cash dividends declared in the second quarter of 2011 were $0.05 per common share, consistent with the amounts declared since the fourth quarter of 2008.

Summary of Critical Accounting Policies

Our significant accounting policies are described in Note 1 to the Consolidated Financial Statements for the year ended December 31, 2010 included in the Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 17, 2011. Not all of these critical accounting policies require management to make difficult, subjective or complex judgments or estimates. Management believes that the following policies would be considered critical under the SEC’s definition.

Allowance for Loan and Lease Losses and Reserve for Unfunded Commitments

The Bank performs regular credit reviews of the loan and lease portfolio to determine the credit quality and adherence to underwriting standards. When loans and leases are originated, they are assigned a risk rating that is reassessed periodically during the term of the loan through the credit review process. Consumer and residential loan portfolios are reviewed monthly for their performance as a pool of loans, since no single loan is individually significant or judged by its risk rating, size or potential risk of loss. In contrast, the monitoring process for the commercial and commercial real estate portfolios includes periodic reviews of individual loans with risk ratings assigned to each loan and performance judged on a loan by loan basis. The Company’s risk rating methodology assigns risk ratings ranging from 1 to 10, where a higher rating represents higher risk. The 10 risk rating categories are a primary factor in determining an appropriate amount for the allowance for loan and lease losses. The Bank has a management ALLL Committee, which is responsible for, among other things, regularly reviewing the ALLL methodology, including loss factors, and ensuring that it is designed and applied in accordance with generally accepted accounting principles. The ALLL Committee reviews and approves loans and leases recommended for impaired status. The ALLL Committee also approves removing loans and leases from impaired status. The Bank’s Audit and Compliance Committee provides board oversight of the ALLL process and reviews and approves the ALLL methodology on a quarterly basis.

Each risk rating is assessed an inherent credit loss factor that determines the amount of the allowance for loan and lease losses provided for that group of loans and leases with similar risk rating. Credit loss factors may vary by region based on management’s belief that there may ultimately be different credit loss rates experienced in each region.

Regular credit reviews of the portfolio also identify loans that are considered potentially impaired. Potentially impaired loans are referred to the ALLL Committee which reviews and approves designated loans as impaired. A loan is considered impaired when based on current information and events, we determine that we will probably not be able to collect all amounts due according to the loan contract, including scheduled interest payments. When we identify a loan as impaired, we measure the impairment using discounted cash flows, except when the sole remaining source of the repayment for the loan is the liquidation of the collateral. In these cases, we use the current fair value of the collateral, less selling costs, instead of discounted cash flows. If we determine that the value of the impaired loan is less than the recorded investment in the loan, we either recognize an impairment reserve as a specific component to be provided for in the allowance for loan and lease losses or charge-off the impaired balance on collateral dependent loans if it is determined that such amount represents a confirmed loss. The combination of the risk rating-based allowance component and the impairment reserve allowance component lead to an allocated allowance for loan and lease losses.

The Bank may also maintain an unallocated allowance amount to provide for other credit losses inherent in a loan and lease portfolio that may not have been contemplated in the credit loss factors. This unallocated amount generally comprises less than 10% of the allowance, but may be maintained at higher levels during times of economic conditions characterized by falling real estate values. The unallocated amount is reviewed periodically based on trends in credit losses, the results of credit reviews and overall economic trends.

The reserve for unfunded commitments (“RUC”) is established to absorb inherent losses associated with our commitment to lend funds, such as with a letter or line of credit. The adequacy of the ALLL and RUC are monitored on a regular basis and are based on management’s evaluation of numerous factors. These factors include the quality of the current loan portfolio; the trend in the loan portfolio’s risk ratings; current economic conditions; loan concentrations; loan growth rates; past-due and non-performing trends; evaluation of specific loss estimates for all significant problem loans; historical charge-off and recovery experience; and other pertinent information.

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Management believes that the ALLL was adequate as of June 30, 2011. There is, however, no assurance that future loan losses will not exceed the levels provided for in the ALLL and could possibly result in additional charges to the provision for loan and lease losses. In addition, bank regulatory authorities, as part of their periodic examination of the Bank, may require additional charges to the provision for loan and lease losses in future periods if warranted as a result of their review. Approximately 80% of our loan portfolio is secured by real estate, and a significant decline in real estate market values may require an increase in the allowance for loan and lease losses.

Covered Loans and FDIC Indemnification Asset

Loans acquired in a FDIC-assisted acquisition that are subject to a loss-share agreement are referred to as “covered loans” and reported separately in our statements of financial condition. Acquired loans are aggregated into pools based on individually evaluated common risk characteristics and aggregate expected cash flows were estimated for each pool. A pool is accounted for as a single asset with a single interest rate, cumulative loss rate and cash flow expectation. The cash flows expected to be received over the life of the pool were estimated by management with the assistance of a third party valuation specialist. These cash flows were input into a ASC 310-30 compliant accounting loan system which calculates the carrying values of the pools and underlying loans, book yields, effective interest income and impairment, if any, based on actual and projected events. Default rates, loss severity, and prepayment speeds assumptions will be periodically reassessed and updated within the accounting model to update our expectation of future cash flows. The excess of the cash flows expected to be collected over a pool’s carrying value is considered to be the accretable yield and is recognized as interest income over the estimated life of the loan or pool using the effective yield method. The accretable yield may change due to changes in the timing and amounts of expected cash flows. Changes in the accretable yield are disclosed quarterly.

The Company has elected to account for amounts receivable under the loss-share agreement as an indemnification asset in accordance with FASB ASC 805, Business Combinations. The FDIC indemnification asset is initially recorded at fair value, based on the discounted value of expected future cash flows under the loss-share agreement. The difference between the carrying value and the undiscounted cash flows the Company expects to collect from the FDIC will be accreted or amortized into non-interest income over the life of the FDIC indemnification asset, which is maintained at the loan pool level.

Mortgage Servicing Rights (“MSR”)

The Company determines its classes of servicing assets based on the asset type being serviced along with the methods used to manage the risk inherent in the servicing assets, which includes the market inputs used to value the servicing assets. The Company measures its residential mortgage servicing assets at fair value and reports changes in fair value through earnings. Fair value adjustments encompass market-driven valuation changes and the runoff in value that occurs from the passage of time, which are separately reported. Under the fair value method, the MSR is carried in the balance sheet at fair value and the changes in fair value are reported in earnings under the caption mortgage banking revenue in the period in which the change occurs.

Retained mortgage servicing rights are measured at fair values as of the date of sale. We use quoted market prices when available. Subsequent fair value measurements are determined using a discounted cash flow model. In order to determine the fair value of the MSR, the present value of expected future cash flows is estimated. Assumptions used include market discount rates, anticipated prepayment speeds, delinquency and foreclosure rates, and ancillary fee income. This model is periodically validated by an independent external model validation group. The model assumptions and the MSR fair value estimates are also compared to observable trades of similar portfolios as well as to MSR broker valuations and industry surveys, as available.

The expected life of the loan can vary from management’s estimates due to prepayments by borrowers, especially when rates fall. Prepayments in excess of management’s estimates would negatively impact the recorded value of the mortgage servicing rights. The value of the mortgage servicing rights is also dependent upon the discount rate used in the model, which we base on current market rates. Management reviews this rate on an ongoing basis based on current market rates. A significant increase in the discount rate would reduce the value of mortgage servicing rights. Additional information is included in Note 7 of the Notes to Consolidated Financial Statements.

Valuation of Goodwill and Intangible Assets

At June 30, 2011, we had $679.7 million in goodwill and other intangible assets as a result of business combinations. Goodwill and other intangible assets with indefinite lives are not amortized but instead are periodically tested for impairment. Management performs an impairment analysis for the intangible assets with indefinite lives on an annual basis as of December 31. Additionally, goodwill and other intangible assets with indefinite lives are evaluated on an interim basis when events or circumstance indicate impairment potentially exists. The impairment analysis requires management to make subjective judgments. Events and factors that may significantly affect the estimates include, among others, competitive forces, customer behaviors and attrition, changes in revenue growth trends, cost structures, technology, changes in discount rates and specific industry and market conditions. There can be no assurance that changes in circumstances, estimates or assumption may result in additional impairment of all, or some portion of, goodwill.

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Stock-based Compensation

In accordance with FASB ASC 718, Stock Compensation, we recognize expense in the income statement for the grant-date fair value of stock options and other equity-based forms of compensation issued to employees over the employees’ requisite service period (generally the vesting period). The requisite service period may be subject to performance conditions. The fair value of each option grant is estimated as of the grant date using the Black-Scholes option-pricing model. Management assumptions utilized at the time of grant impact the fair value of the option calculated under the Black-Scholes methodology, and ultimately, the expense that will be recognized over the life of the option. Additional information is included in Note 12 of the Notes to Consolidated Financial Statements.

Fair Value

FASB ASC 820, Fair Value Measurements and Disclosures, establishes a hierarchical disclosure framework associated with the level of pricing observability utilized in measuring financial instruments at fair value. The degree of judgment utilized in measuring the fair value of financial instruments generally correlates to the level of pricing observability. Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of pricing observability and a lesser degree of judgment utilized in measuring fair value. Conversely, financial instruments rarely traded or not quoted will generally have little or no pricing observability and a higher degree of judgment utilized in measuring fair value. Pricing observability is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established and the characteristics specific to the transaction. See Note 16 of the Notes to Consolidated Financial Statements for additional information about the level of pricing transparency associated with financial instruments carried at fair value.

Recent Accounting Pronouncements

In July 2010, the FASB issued ASU No. 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The ASU expands existing disclosures to require an entity to provide additional information in their disclosures about the credit quality of their financing receivables and the credit reserves held against them. Specifically, entities will be required to present a roll forward of activity in the allowance for credit losses, the nonaccrual status of financing receivables by class of financing receivables, and impaired financing receivables by class of financing receivables, all on a disaggregated basis. The ASU also requires an entity to provide additional disclosures on credit quality indicators of financing receivables at the end of the reporting period by class of financing receivables, the aging of past due financing receivables at the end of the reporting period by class of financing receivables, the nature and extent of troubled debt restructurings that occurred during the period by class of financing receivables and their effect on the allowance for credit losses and significant purchases and sales of financing receivables during the reporting period disaggregated by portfolio segment. For public entities, the disclosures of period-end balances are effective for interim and annual reporting periods ending after December 15, 2010. For public entities, the disclosures of activity are effective for interim and annual reporting periods beginning on or after December 15, 2010. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and the disclosures required are included in Note 5 of the Notes to Consolidated Financial Statements.

In December 2010, the FASB issued ASU No. 2010-29, Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations. This update clarifies that if comparative financial statements are presented in disclosure of supplementary pro forma information for a business combination, revenue and earnings of the combined entity should be disclosed as though the business combination occurred as of the beginning of the comparable prior annual reporting period only. Additionally, supplemental pro forma disclosures should include a description of the nature and amount of material, nonrecurring pro forma adjustments included in the reported pro forma revenue and earnings. This update is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In December 2010, the FASB issued ASU No. 2010-28, Intangibles—Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts. The amendments in this update modify step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing guidance, which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. For public entities, the amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

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In January 2011, the FASB issued ASU No. 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. This ASU temporarily delays the effective date of the disclosures about troubled debt restructurings in Update 2010-20 for public entities. The delay is intended to allow the Board time to complete its deliberations on what constitutes a troubled debt restructuring. The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring will then be coordinated. Currently, that guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011. Accordingly, the Company has not included the disclosures deferred by this ASU.

In April 2011, the FASB issued ASU No. 2011-02, A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring. The Update provides additional guidance relating to when creditors should classify loan modifications as troubled debt restructurings. The ASU also ends the deferral issued in January 2010 of the disclosures about troubled debt restructurings required by ASU No. 2010-20. The provisions of ASU No. 2011-02 and the disclosure requirements of ASU No. 2010-20 are effective for the Company’s interim reporting period ending September 30, 2011. The guidance applies retrospectively to restructurings occurring on or after January 1, 2011. The adoption of this ASU is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2011, the FASB issued ASU No. 2011-03, Reconsideration of Effective Control for Repurchase Agreements. The Update amends existing guidance to remove from the assessment of effective control, the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee and, as well, the collateral maintenance implementation guidance related to that criterion. ASU No. 2011-02 is effective for the Company’s reporting period beginning on or after December 15, 2011. The guidance applies prospectively to transactions or modification of existing transactions that occur on or after the effective date and early adoption is not permitted. The adoption of this ASU will not have a material impact on the Company’s consolidated financial statements.

In April 2011, the FASB issued ASU No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The Update amends existing guidance regarding the highest and best use and valuation premise by clarifying these concepts are only applicable to measuring the fair value of nonfinancial assets. The Update also clarifies that the fair value measurement of financial assets and financial liabilities which have offsetting market risks or counterparty credit risks that are managed on a portfolio basis, when several criteria are met, can be measured at the net risk position. Additional disclosures about Level 3 fair value measurements are required including a quantitative disclosure of the unobservable inputs and assumptions used in the measurement, a description of the valuation process in place, and discussion of the sensitivity of fair value changes in unobservable inputs and interrelationships about those inputs as well disclosure of the level of the fair value of items that are not measured at fair value in the financial statements but disclosure of fair value is required. The provisions of ASU No. 2011-04 are effective for the Company’s reporting period beginning after December 15, 2011 and should be applied prospectively. The Company is currently evaluating the impact of this ASU and does not expect it to have a material impact on the Company’s consolidated financial statements.

In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income. The Update amends current guidance to allow a company the option of presenting the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The provisions do not change the items that must be reported in other comprehensive income or when an item of other comprehensive must to reclassified to net income. The amendments do not change the option for a company to present components of other comprehensive income either net of related tax effects or before related tax effects, with one amount shown for the aggregate income tax expense (benefit) related to the total of other comprehensive income items. The amendments do not affect how earnings per share is calculated or presented. The provisions of ASU No. 2011-05 are effective for the Company’s reporting period beginning after December 15, 2011 and should be applied retrospectively. Early adoption is permitted and there are no required transition disclosures. The adoption of this ASU will not have a material impact on the Company’s consolidated financial statements.

RESULTS OF OPERATIONS

OVERVIEW

For the three months ended June 30, 2011, net earnings available to common shareholders were $17.7 million, or $0.15 per diluted common share, as compared to net earnings available to common shareholders of $3.4 million, or $0.03 per diluted common share, for the three months ended June 30, 2010. For the six months ended June 30, 2011, net earnings available to common shareholders was $31.1 million or $0.27 per diluted common share, as compared to net loss available to common shareholders of $246,000, or no loss per diluted common share, for the six months ended June 30, 2010.

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The increase in net earnings for the three months ended June 30, 2011 compared to the same period of the prior year is principally attributable to increased net interest income, decreased provision for non-covered loan losses, and increased non-interest income, partially offset by increased non-interest expense. The increase in net income for the six months ended June 30, 2010 compared to the same period of the prior year is principally attributable to increased net interest income and decreased provision for non-covered loan losses, partially offset by decreased non-interest income and increased non-interest expense. Non-interest income includes a bargain purchase gain on acquisition in the six months ended June 30, 2010 of $6.4 million relating to the acquisition of Evergreen. We assumed certain assets and liabilities of Evergreen, Rainier, and Nevada Security on January 22, 2010, February 26, 2010, and June 18, 2010, respectively, and the results of the acquired operations are included in our financial results starting on January 23, 2010, February 27, 2010, and June 19, 2010, respectively.

Umpqua recognizes gains or losses on our junior subordinated debentures carried at fair value resulting from the estimated market credit risk adjusted spread and changes in interest rates that do not directly correlate with the Company’s operating performance. Also, Umpqua incurs significant expenses related to the completion and integration of mergers and acquisitions. Additionally, we may recognize goodwill impairment losses that have no direct effect on the Company’s or the Bank’s cash balances, liquidity, or regulatory capital ratios. Lastly, Umpqua may recognize one-time bargain purchase gains on certain FDIC-assisted acquisitions that are not reflective of Umpqua’s on-going earnings power. Accordingly, management believes that our operating results are best measured on a comparative basis excluding the impact of gains or losses on junior subordinated debentures measured at fair value, net of tax, merger-related expenses, net of tax, and other charges related to business combinations such as goodwill impairment charges or bargain purchase gains, net of tax. We define operating earnings as earnings available to common shareholders before gains or losses on junior subordinated debentures carried at fair value, net of tax, bargain purchase gains on acquisitions, net of tax, merger related expenses, net of tax, and goodwill impairment, and we calculate operating earnings per diluted share by dividing operating earnings by the same diluted share total used in determining diluted earnings per common share.

The following table provides the reconciliation of earnings (loss) available to common shareholders (GAAP) to operating earnings (loss) (non-GAAP), and earnings (loss) per diluted common share (GAAP) to operating earnings (loss) per diluted share (non-GAAP) for the three and six months ended June 30, 2011 and 2010:

Reconciliation of Net Earnings (Loss) Available to Common Shareholders to Operating Earnings (Loss)

(in thousands, except per share data)

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Net earnings (loss) available to common shareholders	$	17,699	$	3,447	$	31,104	$	(246)
Adjustments:
Net loss (gain) on junior subordinated debentures carried at fair value, net of tax		328		-		653		(3,653)
Bargain purchase gain on acquisitions, net of tax		-		-		-		(3,862)
Merger-related expenses, net of tax		43		1,301		151		2,444
Operating earnings (loss)	$	18,070	$	4,748	$	31,908	$	(5,317)
Per diluted share:
Net earnings (loss) available to common shareholders	$	0.15	$	0.03	$	0.27	$	-
Adjustments:
Net loss (gain) on junior subordinated debentures carried at fair value, net of tax		0.01		-		0.01		(0.03)
Bargain purchase gain on acquisitions, net of tax		-		-		-		(0.04)
Merger-related expenses, net of tax		-		0.01		-		0.02
Operating earnings (loss)	$	0.16	$	0.04	$	0.28	$	(0.05)

The following table presents the returns on average assets, average common shareholders’ equity and average tangible common shareholders’ equity for the three and six months ended June 30, 2011 and 2010. For each of the periods presented, the table includes the calculated ratios based on reported net earnings (loss) available to common shareholders and operating income (loss) as shown in the table above. Our return on average common shareholders’ equity is negatively impacted as the result of capital required to support goodwill. To the extent this performance metric is used to compare our performance with other financial institutions that do not have merger-related intangible assets, we believe it beneficial to also consider the return on average tangible common shareholders’ equity. The return on average tangible common shareholders’ equity is calculated by dividing net earnings (loss) available to common shareholders by average shareholders’ common equity less average goodwill and intangible assets, net (excluding MSRs). The return on average tangible common shareholders’ equity is considered a non-GAAP financial measure and should be viewed in conjunction with the return on average common shareholders’ equity.

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Return on Average Assets, Common Shareholders’ Equity and Tangible Common Shareholders’ Equity

(dollars in thousands)

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Returns on average assets:
Net earnings (loss) available to common shareholders		0.62%		0.13%		0.54%		0.00%
Operating earnings (loss)		0.63%		0.18%		0.56%		-0.10%
Returns on average common shareholders’ equity:
Net earnings (loss) available to common shareholders		4.25%		0.86%		3.78%		-0.03%
Operating earnings (loss)		4.34%		1.18%		3.88%		-0.71%
Returns on average tangible common shareholders’ equity:
Net earnings (loss) available to common shareholders		7.17%		1.49%		6.41%		-0.06%
Operating earnings (loss)		7.32%		2.05%		6.57%		-1.26%
Calculation of average common tangible shareholders’ equity:
Average common shareholders’ equity	$	1,669,942	$	1,607,661	$	1,659,864	$	1,517,797
Less: average goodwill and other intangible assets, net		(680,202)		(677,739)		(680,845)		(665,825)
Average tangible common shareholders’ equity	$	989,740	$	929,922	$	979,019	$	851,972

Additionally, management believes “tangible common equity” and the “tangible common equity ratio” are meaningful measures of capital adequacy. Umpqua believes the exclusion of certain intangible assets in the computation of tangible common equity and tangible common equity ratio provides a meaningful base for period-to-period and company-to-company comparisons, which management believes will assist investors in analyzing the operating results and capital of the Company. Tangible common equity is calculated as total shareholders’ equity less preferred stock and less goodwill and other intangible assets, net (excluding MSRs). In addition, tangible assets are total assets less goodwill and other intangible assets, net (excluding MSRs). The tangible common equity ratio is calculated as tangible common shareholders’ equity divided by tangible assets. The tangible common equity and tangible common equity ratio is considered a non-GAAP financial measure and should be viewed in conjunction with the total shareholders’ equity and the total shareholders’ equity ratio.

The following table provides a reconciliation of ending shareholders’ equity (GAAP) to ending tangible common equity (non-GAAP), and ending assets (GAAP) to ending tangible assets (non-GAAP) as of June 30, 2011 and December 31, 2010:

Reconciliations of Total Shareholders’ Equity to Tangible Common Shareholders’ Equity and Total Assets to Tangible Assets

(dollars in thousands)

	June 30, 2011		December 31, 2010
Total shareholders’ equity	$	1,674,321	$	1,642,574
Subtract:
Goodwill and other intangible assets, net		679,671		681,969
Tangible common shareholders’ equity	$	994,650	$	960,605
Total assets	$	11,459,692	$	11,668,710
Subtract:
Goodwill and other intangible assets, net		679,671		681,969
Tangible assets	$	10,780,021	$	10,986,741
Tangible common equity ratio		9.23%		8.74%

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although we believe these non-GAAP financial measure are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP.

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NET INTEREST INCOME

Net interest income is the largest source of our operating income. Net interest income for the three months ended June 30, 2011 was $109.4 million, an increase of $17.1 million or 18% compared to the same period in 2010. Net interest income for the six months ended June 30, 2011 was $214.3 million, an increase of $34.9 million or 19% compared to the same period in 2010. The results for the three and six months ended June 30, 2011 as compared to the same periods in 2010 are attributable to growth in outstanding average interest-earning assets, primarily covered loans and investment securities, and an increase in net interest margin, partially offset by a decrease in non-covered loans and an increase in interest-bearing liabilities. In addition to organic growth, the FDIC-assisted purchase and assumption of certain assets and liabilities of Evergreen, Rainier, and Nevada Security, which were completed on January 22, 2010, February 26, 2010, and June 18, 2010, respectively, contributed to the increase in interest-earning assets and interest-bearing liabilities in the three and six months ended June 30, 2011 over the same period in 2010.

The net interest margin (net interest income as a percentage of average interest-earning assets) on a fully tax equivalent basis was 4.32% for the three months ended June 30, 2011, an increase of 27 basis points as compared to the same period in 2010. The net interest margin on a fully tax-equivalent basis was 4.25% for the six months ended June 30, 2011, an increase of 20 basis points as compared to the same period in 2010. The increase in net interest margin for the three and six months ended June 30, 2011 as compared to the same periods in the prior year primarily resulted from investing excess interest earning cash into the investment portfolio, an increase in covered loans outstanding, increased yield on the covered loan portfolio as a result of payoffs ahead of expectations and declining costs of interest-bearing deposits, partially offset by an increase in interest and fee income reversals on non-covered, non-accrual loans, a decline in non-covered loans outstanding and an increase in interest-bearing liabilities.

Loan disposal related activities within the covered loan portfolio, either through loans being paid off in full or transferred to other real estate owned (“OREO”), result in gains within covered loan interest income to the extent assets received in satisfaction of debt (such as cash or the net realizable value of OREO received) exceeds the allocated carrying value of the loan disposed of from the pool. Loan disposal activities contributed $6.7 million and $14.9 million of interest income for the three and six months ended June 30, 2011. No loan disposal gains were recognized during the three and six months ended June 30, 2010. While dispositions of covered loans positively impact net interest margin, we recognize a corresponding decrease to the change in FDIC indemnification asset at the incremental loss-sharing rate within other non-interest income. Net interest income for the three and six months ended June 30, 2011 was negatively impacted by the $0.5 million and $1.8 million reversal of interest and fee income on non-covered, non-accrual loans, as compared to the $0.7 million and $1.8 million reversal of interest and fee income during the three and six months ended June 30, 2010. Excluding the impact of covered loan disposal gains and interest and fee income reversals on non-covered, non-accrual loans, tax equivalent net interest margin would have been 4.08% and 4.00% for the three and six months ended 2011 and 4.08% and 4.09% for the three and six months ended June 30, 2010.

Also contributing to the increase in net interest margin in the current quarter as compared is to the same period of the prior year is the continued efforts of management to reduce the cost of interest-bearing liabilities, specifically interest-bearing deposits. The total cost of interest-bearing deposits for the three and six months ended June 30, 2011 was 0.79% and 0.81%, representing a 31 and 33 basis point decrease since the three and six months ended June 30, 2010.

Our net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, as well as changes in the yields earned on interest-earning assets and rates paid on deposits and borrowed funds. The following table presents condensed average balance sheet information, together with interest income and yields on average interest-earning assets, and interest expense and rates paid on average interest-bearing liabilities for the three and six months ended June 30, 2011 and 2010:

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Average Rates and Balances (Quarterly)

(dollars in thousands)

	Three months ended June 30, 2011						Three months ended June 30, 2010
	Average Balance		Interest Income or Expense		Average Yields or  Rates		Average Balance		Interest Income or Expense		Average Yields or  Rates
INTEREST-EARNING ASSETS:
Non-covered loans and leases (1)	$	5,694,585	$	79,321		5.59%	$	5,833,193	$	84,584		5.82%
Covered loans and leases		720,064		22,226		12.38%		698,537		12,656		7.27%
Taxable securities		3,060,105		24,352		3.18%		1,628,195		15,572		3.83%
Non-taxable securities (2)		223,556		3,256		5.83%		231,675		3,330		5.75%
Temporary investments and interest-bearing deposits		548,741		340		0.25%		849,113		545		0.26%
Total interest earning assets		10,247,051		129,495		5.07%		9,240,713		116,687		5.07%
Allowance for loan and lease losses		(96,534)						(96,903)
Other assets		1,362,296						1,322,946
Total assets	$	11,512,813					$	10,466,756
INTEREST-BEARING LIABILITIES:
Interest-bearing checking and savings accounts	$	4,621,016	$	5,253		0.46%	$	4,283,130	$	7,098		0.66%
Time deposits		2,869,203		9,445		1.32%		2,452,535		11,365		1.86%
Federal funds purchased and repurchase agreements		103,828		131		0.51%		48,335		123		1.02%
Term debt		256,940		2,301		3.59%		314,652		2,779		3.54%
Junior subordinated debentures		183,864		1,926		4.20%		182,539		1,939		4.26%
Total interest-bearing liabilities		8,034,851		19,056		0.95%		7,281,191		23,304		1.28%
Non-interest-bearing deposits		1,731,575						1,475,852
Other liabilities		76,445						58,472
Total liabilities		9,842,871						8,815,515
Preferred equity		-						43,580
Common equity		1,669,942						1,607,661
Total liabilities and shareholders’ equity	$	11,512,813					$	10,466,756
NET INTEREST INCOME			$	110,439					$	93,383
NET INTEREST SPREAD						4.12%						3.79%
AVERAGE YIELD ON EARNING ASSETS (1), (2)						5.07%						5.07%
INTEREST EXPENSE TO EARNING ASSETS						0.75%						1.02%
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)						4.32%						4.05%

(1) Non-covered non-accrual loans, leases, and mortgage loans held for sale are included in the average balance.

(2) Tax-exempt income has been adjusted to a tax equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $1.1 million and $1.1 million for the three months ended June 30, 2011 and 2010, respectively.

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Average Rates and Balances (Year-to-Date)

(dollars in thousands)

	Six months ended June 30, 2011						Six months ended June 30, 2010
	Average Balance		Interest Income or Expense		Average Yields or Rates		Average Balance		Interest Income or Expense		Average Yields or Rates
INTEREST-EARNING ASSETS:
Non-covered loans and leases (1)	$	5,683,085	$	158,054		5.61%	$	5,895,721	$	169,037		5.78%
Covered loans and leases		743,855		43,773		11.87%		531,853		18,911		7.17%
Taxable securities		3,012,521		46,398		3.08%		1,619,351		31,647		3.91%
Non-taxable securities (2)		221,551		6,494		5.86%		226,569		6,565		5.80%
Temporary investments and interest-bearing deposits		600,505		741		0.25%		764,491		944		0.25%
Total interest earning assets		10,261,517		255,460		5.02%		9,037,985		227,104		5.07%
Allowance for loan and lease losses		(98,348)						(101,558)
Other assets		1,379,447						1,287,003
Total assets	$	11,542,616					$	10,223,430
INTEREST-BEARING LIABILITIES:
Interest-bearing checking and savings accounts	$	4,661,927	$	10,896		0.47%	$	3,930,688	$	15,038		0.77%
Time deposits		2,924,350		19,468		1.34%		2,632,648		22,214		1.70%
Federal funds purchased and repurchase agreements		94,036		253		0.54%		48,520		246		1.02%
Term debt		258,858		4,590		3.58%		248,173		4,299		3.49%
Junior subordinated debentures		183,645		3,839		4.22%		185,564		3,824		4.15%
Total interest-bearing liabilities		8,122,816		39,046		0.97%		7,045,593		45,621		1.31%
Non-interest-bearing deposits		1,688,254						1,462,335
Other liabilities		71,682						60,273
Total liabilities		9,882,752						8,568,201
Preferred equity		-						137,432
Common equity		1,659,864						1,517,797
Total liabilities and shareholders’ equity	$	11,542,616					$	10,223,430
NET INTEREST INCOME (3)			$	216,414					$	181,483
NET INTEREST SPREAD						4.05%						3.76%
AVERAGE YIELD ON EARNING ASSETS (1), (2)						5.02%						5.07%
INTEREST EXPENSE TO EARNING ASSETS						0.77%						1.01%
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2), (3)						4.25%						4.05%

(1) Non-covered non-accrual loans, leases, and mortgage loans held for sale are included in the average balance.

(2) Tax-exempt income has been adjusted to a tax equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $2.2 million and $2.1 million for the six months ended June 30, 2011 and 2010, respectively.

The following tables sets forth a summary of the changes in tax equivalent net interest income due to changes in average asset and liability balances (volume) and changes in average rates (rate) for the three and six months ended June 30, 2011 as compared to the same period in 2010. Changes in tax equivalent interest income and expense, which are not attributable specifically to either volume or rate, are allocated proportionately between both variances.

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Rate/Volume Analysis

(in thousands)

	Three months ended June 30, 2011 compared to 2010
	Increase (decrease) in interest income and expense due to changes in
	Volume		Rate		Total
INTEREST-EARNING ASSETS:
Non-covered loans and leases	$	(1,980)	$	(3,283)	$	(5,263)
Covered loans and leases		401		9,169		9,570
Taxable securities		11,764		(2,984)		8,780
Non-taxable securities (1)		(117)		43		(74)
Temporary investments and interest bearing deposits		(187)		(18)		(205)
Total (1)		9,881		2,927		12,808
INTEREST-BEARING LIABILITIES:
Interest bearing checking and savings accounts		525		(2,370)		(1,845)
Time deposits		1,724		(3,644)		(1,920)
Repurchase agreements and federal funds		92		(84)		8
Term debt		(517)		39		(478)
Junior subordinated debentures		14		(27)		(13)
Total		1,838		(6,086)		(4,248)
Net increase in net interest income (1)	$	8,043	$	9,013	$	17,056

(1) Tax exempt income has been adjusted to a tax equivalent basis at a 35% tax rate.

Rate/Volume Analysis (Year-to-Date)

(in thousands)

	Six months ended June 30, 2011 compared to 2010
	Increase (decrease) in interest income and expense due to changes in
	Volume		Rate		Total
INTEREST-EARNING ASSETS:
Non-covered loans and leases	$	(5,997)	$	(4,986)	$	(10,983)
Covered loans and leases		9,407		15,455		24,862
Taxable securities		22,597		(7,846)		14,751
Non-taxable securities (1)		(146)		75		(71)
Temporary investments and interest bearing deposits		(202)		(1)		(203)
Total (1)		25,659		2,697		28,356
INTEREST-BEARING LIABILITIES:
Interest bearing checking and savings accounts		2,445		(6,587)		(4,142)
Time deposits		2,282		(5,028)		(2,746)
Repurchase agreements and federal funds		158		(151)		7
Term debt		188		103		291
Junior subordinated debentures		(39)		54		15
Total		5,034		(11,609)		(6,575)
Net increase in net interest income (1)	$	20,625	$	14,306	$	34,931

(1) Tax exempt income has been adjusted to a tax equivalent basis at a 35% tax rate.

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PROVISION FOR LOAN AND LEASE LOSSES

The provision for non-covered loan and lease losses was $15.5 million and $30.5 million for the three and six months ended June 30, 2011, as compared to $29.8 million and $71.9 million for the same periods in 2010. As an annualized percentage of average outstanding non-covered loans, the provision for non-covered loan losses recorded for the three and six months ended June 30, 2011 was 1.10% and 1.09% as compared to 1.04% and 2.47% in the same periods in 2010.

The decrease in the provision for loan and lease losses in the three and six months ended June 30, 2011 as compared to the same period in 2010 is principally attributable to the stabilization of credit quality of non-performing loans and the decrease in net charge-offs during the period.

The Company recognizes the charge-off of impairment reserves on impaired loans in the period they arise for collateral dependent loans. Therefore, the non-covered, non-accrual loans of $109.9 million as of June 30, 2011 have already been written-down to their estimated fair value, less estimated costs to sell, and are expected to be resolved with no additional material loss, absent further decline in market prices. Depending on the characteristics of a loan, the fair value of collateral is estimated by obtaining external appraisals.

The provision for non-covered loan and lease losses is based on management’s evaluation of inherent risks in the loan portfolio and a corresponding analysis of the allowance for non-covered loan and lease losses. Additional discussion on loan quality and the allowance for non-covered loan and lease losses is provided under the heading Asset Quality and Non-Performing Assets below.

The provision for covered loan and lease losses was $3.8 million and $11.0 million for the three and six months ended June 30, 2011, as compared to no provision for the same periods in 2010. Provisions for covered loan and leases losses are recognized subsequent to acquisition to the extent it is probable we will be unable to collect all cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimate after acquisition, considering both the timing and amount of those expected cash flows. Provisions may be required when determined losses of unpaid principal incurred exceed previous loss expectations to-date, or future cash flows previously expected to be collectible are no longer probable of collection. Provisions for covered loan and lease losses, including amounts advanced subsequent to acquisition, are not reflected in the allowance for non-covered loan and lease losses, rather as a valuation allowance netted against the carrying value of the covered loan and lease balance accounted for under ASC 310-30, in accordance with the guidance.

NON-INTEREST INCOME

Non-interest income for the three months ended June 30, 2011 was $19.6 million, an increase of $1.1 million, or 6%, as compared to the same period in 2010. Non-interest income for the six months ended June 30, 2011 was $41.2 million, a decrease of $7.4 million, or 15%, as compared to the same period in 2010. The following table presents the key components of non-interest income for the three and six months ended June 30, 2011 and 2010:

Non-Interest Income

(in thousands)

	Three months ended June 30,								Six months ended June 30,
	2011		2010		Change Amount		Change Percent		2011		2010		Change Amount		Change Percent
Service charges on deposit accounts	$	8,540	$	9,585	$	(1,045)		-11%	$	16,361	$	17,950	$	(1,589)		-9%
Brokerage commissions and fees		3,276		3,139		137		4%		6,653		5,778		875		15%
Mortgage banking revenue, net		4,807		3,209		1,598		50%		10,082		6,687		3,395		51%
Gain (loss) on investment securities, net		5,631		-		5,631		NM		5,606		(288)		5,894		NM
(Loss) gain on junior subordinated debentures carried at fair value		(547)		-		(547)		NM		(1,089)		6,088		(7,177)		NM
Bargain purchase gain on acquisition		-		-		-		NM		-		6,437		(6,437)		NM
Change in FDIC indemnification asset		(5,551)		263		(5,814)		-2211%		(2,646)		873		(3,519)		NM
Other income		3,471		2,367		1,104		47%		6,245		5,085		1,160		23%
Total	$	19,627	$	18,563	$	1,064		6%	$	41,212	$	48,610	$	(7,398)		-15%

NM - Not meaningful

The decrease in deposit service charges in the three and six months ended June 30, 2011 compared to the same period in 2010 reflects a $2.0 million, or 37%, reduction, and $3.6 million, or 36%, reduction in non-sufficient funds and overdraft fee revenue in the respective periods due to regulatory reform changes which took place in the third quarter of 2010. Other deposit service charges increased $1.0 million in the second quarter of 2011, and $2.0 million for the six months ended June 30, 2011 as compared to the same periods of 2010 as a result of the overall increase in deposits including deposits acquired from the Rainier, Evergreen and Nevada Security acquisitions.

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Brokerage commissions and fees for the three and six months ended June 30, 2011 increased 4% and 15% as a result of the increase in assets under management under the Wealth Management segment.

Mortgage banking revenue for the three and six months ended June 30, 2011 increased due to an increase in purchase and refinancing activity, compared to the same periods of the prior year. Closed mortgage volume for the three and six months ended June 30, 2011 was $185.0 million and $351.8 million, representing a 28% and 29% increase compared to the same periods of the prior year.

During the second quarter of 2011, the Company sold investment securities which carried a higher duration in future potential higher interest rate scenarios to reduce the price risk of the portfolio if interest rates were to increase significantly. In connection with the sale, we recognized a gain on sale of $5.6 million.

For the three and six months ended June 30, 2011, we recorded a loss of $547,000 and $1.1 million, as compared to no gain and a gain of $6.1 million for the three and six months ended June 30, 2010, in the change of fair value on the junior subordinated debentures recorded at fair value. Additional information on the junior subordinated debentures carried at fair value is included in Note 9 of the Notes to Condensed Consolidated Financial Statements and under the heading Junior Subordinated Debentures.

In the prior year, a bargain purchase gain of $6.4 million represented the excess of the estimated fair value of the assets acquired over the estimated fair value of the liabilities assumed in the Evergreen acquisition.

The change in FDIC indemnification asset represents a decrease in cash flows expected to be recoverable under the loss-share agreements entered into with the FDIC in connection with the Evergreen, Rainier, and Nevada Security FDIC-assisted acquisitions.

Other income for the three and six months ended June 30, 2011 increased $1.1 million and $1.2 million compared to the same periods in the prior year, primarily due to net revenue related to initiation of an interest rate swap program with commercial banking customers to facilitate their risk management strategies.

NON-INTEREST EXPENSE

Non-interest expense for the three months ended June 30, 2011 was $83.2 million, an increase of $8.4 million, or 11%, as compared to the same period in 2010. Non-interest expense for the six months ended June 30, 2011 was $167.4 million, an increase of $22.7 million, or 16%, as compared to the same period in 2010. The following table presents the key elements of non-interest expense for the three and six months ended June 30, 2011 and 2010:

Non-Interest Expense

(in thousands)

	Three months ended June 30,								Six months ended June 30,
	2011		2010		Change Amount		Change Percent		2011		2010		Change Amount		Change Percent
Salaries and employee benefits	$	43,808	$	39,604	$	4,204		11%	$	88,418	$	75,844	$	12,574		17%
Net occupancy and equipment		12,547		11,472		1,075		9%		25,064		22,148		2,916		13%
Communications		2,796		2,596		200		8%		5,606		4,820		786		16%
Marketing		1,798		1,714		84		5%		2,649		2,723		(74)		-3%
Services		6,026		5,831		195		3%		11,908		10,746		1,162		11%
Supplies		843		1,003		(160)		-16%		1,624		1,729		(105)		-6%
FDIC assessments		2,821		3,555		(734)		-21%		6,694		6,999		(305)		-4%
Net loss (gain) on other real estate owned		3,917		(952)		4,869		-511%		7,701		1,359		6,342		467%
Intangible amortization		1,251		1,368		(117)		-9%		2,502		2,676		(174)		-7%
Merger related expenses		71		2,169		(2,098)		-97%		252		4,075		(3,823)		-94%
Other expenses		7,329		6,473		856		13%		14,990		11,585		3,405		29%
Total	$	83,207	$	74,833	$	8,374		11%	$	167,408	$	144,704	$	22,704		16%

Included in non-interest expense are several categories which are outside of the operational control of the Company or depend on changes in market values, including FDIC deposit insurance assessments and gain or loss on other real estate owned (“OREO”), as well as infrequently occurring expenses such as merger related costs. Excluding these non-controllable or infrequently occurring items and items related to changes in market values, the remaining non-interest expense items totaled $76.4 million for the second quarter of 2011 compared to $70.1 million for the second quarter of 2010, and $152.8 million for the six months ended June 30, 2011 compared to $132.3 million for the six months ended June 30, 2010.

Salaries and employee benefits costs increased $4.2 million in the three months ending June 30, 2011, as compared to the same period prior year. The increase is due to variable mortgage compensation based on increased volume and revenue, and the increase in full-time equivalent employees to generate and support various growth initiatives. Salaries and employee benefits costs increased $12.6 million in the six months ending June 30, 2011, as compared to the same period prior year. Approximately $1.8 million of the increase is the result of the acquisition of Rainier, Evergreen, and Nevada Security, with additional increases due to variable mortgage compensation, and the increase in full-time equivalent employees throughout the Company to support growth initiatives.

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Net occupancy and equipment expense increased $1.1 million for the three months ended June 30, 2011, and $2.9 million for the six months ended June 30, 2011 as compared to the same periods in the prior year. The growth in 2011 is the result of the cost of operating new locations through the acquisition of Rainier, Evergreen and Nevada Security, respectively, and the addition of five de novo Community Banking locations, one Commercial Banking Center and two Mortgage Offices during 2010, and one Community Banking location and one Mortgage Office in 2011. Additionally, during 2010 we remodeled 48 stores including locations acquired.

FDIC assessments decreased $734,000 for the three months ending June 30, 2011 and $305,000 for the six months ended June 30, 2011 as compared to the same periods of the prior year. The decrease resulted from the adoption by the FDIC of a final rule which changed the assessment rate and the assessment base (from a domestic deposit base to a scorecard based assessment system for banks with more than $10 billion in assets), effective in the second quarter of 2011.

We incur significant expenses in connection with the completion and integration of bank acquisitions that are not capitalizable. Classification of expenses as merger-related is done in accordance with the provisions of a Board-approved policy. The merger-related expenses incurred in both 2010 and 2011 relate to the FDIC-assisted acquisitions of Evergreen, Rainier, and Nevada Security.

The economic downturn and depressed real estate values have continued to detrimentally affect our non-covered loan portfolio, has led to a continued elevated level of foreclosures on related properties and movement of the properties into other real estate owned. Through the second quarter of 2011, declines in the market values of these properties after foreclosure resulted in additional losses on the sale of the properties or by valuation adjustments. In the three and six months ended June 30, 2011, the Company recognized net losses on OREO of $3.9 million and $7.7 million as compared to a net gain of $952,000 and a net loss of $1.4 million in the same periods a year ago. Included within the results for the three and six months ended June 30, 2011, the Company recognized net losses on sale and valuation adjustments of covered OREO properties of $73,000 and $1.0 million as compared to $1.5 million for the three and six months ended June 30, 2011 losses.

Other expenses increased $856,000 in the three months ending June 30, 2011, and $3.4 million in the six months ending June 30, 2011 as compared to the same period in the prior year. The increase is primarily associated with covered and non-covered loan and covered and non-covered OREO workout costs, as well as various growth initiatives underway.

INCOME TAXES

Our consolidated effective tax rate as a percentage of pre-tax income for the three and six months ended June 30, 2011 was 33.1% and 32.9% as compared to 44.7% and (5.2%) for the three and six months ended June 30, 2010. The effective tax rates differed from the federal statutory rate of 35% and the apportioned state rate of 4.9% (net of the federal tax benefit) principally because of non-taxable income arising from bank-owned life insurance, income on tax-exempt investment securities, tax credits arising from low income housing investments, and Business Energy tax credits.

FINANCIAL CONDITION

INVESTMENT SECURITIES

Trading securities consist of securities held in inventory by Umpqua Investments for sale to its clients and securities invested in trust for the benefit of certain executives or former employees of acquired institutions as required by agreements. Trading securities were $2.5 million at June 30, 2011, as compared to $3.0 million at December 31, 2010. This decrease is principally attributable to a decrease in Umpqua Investments’ inventory of trading securities.

Investment securities available for sale were $3.2 billion as of June 30, 2011 compared to $2.9 billion at December 31, 2010. Purchases of $690.7 million of investment securities available for sale, an increase in fair value of investments securities available for sale of $20.0 million, and gains recognized on sale, were partially offset by sales and paydowns of $441.7 million and amortization of net purchase price premiums of $16.4 million.

Investment securities held to maturity were $5.6 million as of June 30, 2011 as compared to holdings of $4.8 million at December 31, 2010. The change primarily relates to purchases of $1.6 million, offset by paydowns and maturities of investment securities held to maturity of $757,000.

The following table presents the available for sale and held to maturity investment securities portfolio by major type as of June 30, 2011 and December 31, 2010:

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Investment Securities Composition

(dollars in thousands)

	Investment Securities Available for Sale
	June 30, 2011				December 31, 2010
	Fair Value		%		Fair Value		%
U.S. Treasury and agencies	$	118,953		4%	$	118,789		4%
Obligations of states and political subdivisions		222,898		7%		216,726		8%
Residential mortgage-backed securities and collateralized mortgage obligations		2,833,429		89%		2,581,504		88%
Other debt securities		150		-		152		-
Investments in mutual funds and other equity securities		2,030		-		2,009		-
Total	$	3,177,460		100%	$	2,919,180		100%
	Investment Securities Held to Maturity
	June 30, 2011				December 31, 2010
	Amortized Cost		%		Amortized Cost		%
Obligations of states and political subdivisions	$	1,945		35%	$	2,370		50%
Residential mortgage-backed securities and collateralized mortgage obligations		3,608		65%		2,392		50%
Total	$	5,553		100%	$	4,762		100%

We review investment securities on an ongoing basis for the presence of other-than-temporary impairment (“OTTI”) or permanent impairment, taking into consideration current market conditions, fair value in relationship to cost, extent and nature of the change in fair value, issuer rating changes and trends, whether we intend to sell a security or if it is likely that we will be required to sell the security before recovery of our amortized cost basis of the investment, which may be maturity, and other factors. For debt securities, if we intend to sell the security or it is likely that we will be required to sell the security before recovering its cost basis, the entire impairment loss would be recognized in earnings as an OTTI. If we do not intend to sell the security and it is not likely that we will be required to sell the security but we do not expect to recover the entire amortized cost basis of the security, only the portion of the impairment loss representing credit losses would be recognized in earnings. The credit loss on a security is measured as the difference between the amortized cost basis and the present value of the cash flows expected to be collected. Projected cash flows are discounted by the original or current effective interest rate depending on the nature of the security being measured for potential OTTI. The remaining impairment related to all other factors, the difference between the present value of the cash flows expected to be collected and fair value, is recognized as a charge to other comprehensive income (“OCI”). Impairment losses related to all other factors are presented as separate categories within OCI. For investment securities held to maturity, this amount is accreted over the remaining life of the debt security prospectively based on the amount and timing of future estimated cash flows. The accretion of the impairment related to factors other than credit amount recorded in OCI will increase the carrying value of the investment, and would not affect earnings. If there is an indication of additional credit losses the security is reevaluated according to the procedures described above.

The following tables present the OTTI losses for the three and six months ended June 30, 2011 and 2010 in the held to maturity portfolio:

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(in thousands)

	Three months ended June 30,
	2011			2010
Total other-than-temporary impairment losses	$	110		$	-
Portion of other-than-temporary impairment losses recognized in other comprehensive income (1)		(63	)		-
Net impairment losses recognized in earnings (2)	$	47		$	-
	Six months ended June 30,
	2011			2010
Total other-than-temporary impairment losses	$	110		$	5
Portion of other-than-temporary impairment losses (recognized in) transferred from other comprehensive income (1)		(38	)		284
Net impairment losses recognized in earnings (2)	$	72		$	289

(1) Represents other-than-temporary impairment losses related to all other factors.

(2) Represents other-than-temporary impairment losses related to credit losses.

The OTTI recognized on investment securities held to maturity primarily relates to non-agency collateralized mortgage obligations for all periods presented. Each of these securities holds various levels of credit subordination. The underlying mortgage loans of these securities were originated from 2003 through 2007. At origination, the weighted average loan-to-value of the underlying mortgages was 69%; the underlying borrowers had weighted average FICO scores of 731, and 59% were limited documentation loans. These securities were valued by third-party pricing services using matrix or model pricing methodologies and were corroborated by broker indicative bids. We estimated the cash flows of the underlying collateral for each security considering credit, interest and prepayment risk models that incorporate management’s estimate of projected key assumptions including prepayment rates, collateral default rates and loss severity. Assumptions utilized vary from security to security, and are influenced by factors such as loan interest rates, geographic location, borrower characteristics and vintage, and historical experience. We then used a third party to obtain information about the structure of each security, including subordination and other credit enhancements, in order to determine how the underlying collateral cash flows will be distributed to each security issued in the structure. These cash flows were then discounted at the interest rate used to recognize interest income on each security. We review the actual collateral performance of these securities on a quarterly basis and update the inputs as appropriate to determine the projected cash flows. The following table presents a summary of the significant inputs utilized to measure management’s estimate of the credit loss component on these non-agency collateralized mortgage obligations as of June 30, 2011 and 2010:

	2011						2010
	Range				Weighted		Range				Weighted
	Minimum		Maximum		Average		Minimum		Maximum		Average
Constant prepayment rate		5.0%		20.0%		14.4%		4.0%		25.0%		14.9%
Collateral default rate		5.0%		30.0%		13.2%		8.0%		45.0%		16.8%
Loss severity		30.0%		65.0%		39.0%		20.0%		50.0%		34.6%

Gross unrealized losses in the available for sale investment portfolio was $4.0 million at June 30, 2011. This consisted primarily of unrealized losses on residential mortgage-backed securities and collateralized mortgage obligations of $3.8 million. The unrealized losses were primarily caused by interest rate increases subsequent to the purchase of the securities, and not credit quality. In the opinion of management, these securities are considered only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and not due to concerns regarding the underlying credit of the issuers or the underlying collateral. Additional information about the investment portfolio is provided in Note 3 of the Notes to Condensed Consolidated Financial Statements.

RESTRICTED EQUITY SECURITIES

Restricted equity securities were $32.8 million at June 30, 2011 and $34.5 million at December 31, 2010. The decrease of $1.6 million is attributable to stock redemption by the Federal Home Loan Bank (“FHLB”) of San Francisco. Of the $32.8 million at June 30, 2011, $31.6 million represent the Bank’s investment in the FHLB of Seattle and San Francisco. The remaining restricted equity securities represent investments in Pacific Coast Bankers’ Bancshares stock.

FHLB stock is carried at par and does not have a readily determinable fair value. Ownership of FHLB stock is restricted to the FHLB and member institutions, and can only be purchased and redeemed at par. Although as of June 30, 2011, the FHLB of Seattle complies with all of its regulatory requirements (including the risk-based capital requirement), it remains classified as “undercapitalized” by the Federal Housing Finance Agency (“Finance Agency”). Under Finance Agency regulations, a FHLB that fails to meet any regulatory capital requirement may not declare a dividend or redeem or repurchase capital stock in excess of what is required for members’ current loans.

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Management periodically evaluates FHLB stock for other-than-temporary or permanent impairment. Management’s determination of whether these investments are impaired is based on its assessment of the ultimate recoverability of cost rather than by recognizing temporary declines in value. Moody’s Investors Services rating of the FHLB of Seattle as Aaa with stable outlook was reaffirmed in May 2010, Standard and Poors rating of AA+ was reaffirmed in July 2010 and Fitch Ratings assigned a AAA rating with stable rating outlook in April 2011, reflecting the assumption of U.S. Government support. The Company has determined there is not an other-than-temporary impairment on the FHLB stock investment as of June 30, 2011.

LOANS AND LEASES

Non-covered loans and leases

Total non-covered loans and leases outstanding at June 30, 2011 were $5.7 billion, an increase of $76.6 million as compared to year-end 2010. This increase is principally attributable to net loan originations of $136.6 million, offset by charge-offs of $39.5 million and transfers to other real estate owned of $25.3 million and during the period. The following table presents the concentration distribution of our non-covered loan portfolio at June 30, 2011 and December 31, 2010.

Non-covered Loan Concentrations

(dollars in thousands)

	June 30, 2011				December 31, 2010
	Amount		Percentage		Amount		Percentage
Commercial real estate
Term & multifamily	$	3,532,134		61.6%	$	3,483,475		61.6%
Construction & development		184,707		3.2%		247,814		4.4%
Residential development		112,657		2.0%		147,813		2.6%
Commercial
Term		572,402		10.0%		509,453		9.0%
LOC & other		788,268		13.7%		747,419		13.2%
Residential
Mortgage		245,034		4.3%		222,416		3.9%
Home equity loans & lines		277,453		4.8%		278,585		4.9%
Consumer & other		34,584		0.6%		33,043		0.6%
Deferred loan fees, net		(11,686)		-0.2%		(11,031)		-0.2%
Total	$	5,735,553		100.0%	$	5,658,987		100.0%

Covered loans and leases

Total covered loans and leases outstanding at June 30, 2011 were $698.7 million, a decrease of $87.2 million as compared to year-end 2010. This decrease is principally attributable to net covered loan paydowns and maturities of $63.4 million and transfers to covered other real estate owned of $8.7 million. The following table presents the concentration distribution of our covered loan portfolio at June 30, 2011 and December 31, 2010.

Covered Loan Concentrations

(dollars in thousands)

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	June 30, 2011				December 31, 2010
	Amount		Percentage		Amount		Percentage
Commercial real estate
Term & multifamily	$	515,949		73.8%	$	569,642		72.5%
Construction & development		19,818		2.8%		22,435		2.9%
Residential development		15,947		2.3%		24,706		3.1%
Commercial
Term		37,251		5.3%		42,600		5.4%
LOC & other		28,480		4.1%		35,227		4.5%
Residential
Mortgage		41,068		5.9%		44,824		5.7%
Home equity loans & lines		31,454		4.5%		35,625		4.5%
Consumer & other		8,709		1.3%		10,839		1.4%
Total	$	698,676		100.0%	$	785,898		100.0%

The covered loans are subject to loss-sharing agreements with the FDIC. Under the terms of the Evergreen acquisition loss-sharing agreement, the FDIC will cover a substantial portion of any future losses on loans, related unfunded loan commitments, other real estate owned (“OREO”) and accrued interest on loans for up to 90 days. The FDIC will absorb 80% of losses and share in 80% of loss recoveries on the first $90.0 million on covered assets for Evergreen and absorb 95% of losses and share in 95% of loss recoveries exceeding $90.0 million, except for the Bank will incur losses up to $30.2 million before the loss-sharing will commence. As of June 30, 2011, losses have exceeded $30.2 million. The loss-sharing arrangements for non-single family residential and single family residential loans are in effect for 5 years and 10 years, respectively, and the loss recovery provisions are in effect for 8 years and 10 years, respectively, from the acquisition dates.

Under the terms of the Rainier loss-sharing agreement, the FDIC will cover a substantial portion of any future losses on loans, related unfunded loan commitments, OREO and accrued interest on loans for up to 90 days. The FDIC will absorb 80% of losses and share in 80% of loss recoveries on the first $95.0 million of losses on covered assets and absorb 95% of losses and share in 95% of loss recoveries exceeding $95.0 million. The loss-sharing arrangements for non-single family residential and single family residential loans are in effect for 5 years and 10 years, respectively, and the loss recovery provisions are in effect for 8 years and 10 years, respectively, from the acquisition dates.

Under the terms of the Nevada Security loss-sharing agreement, the FDIC will cover a substantial portion of any future losses on loans, related unfunded loan commitments, OREO and accrued interest on loans for up to 90 days. The FDIC will absorb 80% of losses and share in 80% of loss recoveries on all covered assets. The loss-sharing arrangements for non-single family residential and single family residential loans are in effect for 5 years and 10 years, respectively, and the loss recovery provisions are in effect for 8 years and 10 years, respectively, from the acquisition dates.

Discussion of and tables related to the covered loan segment is provided under the heading Asset Quality and Non-Performing Assets.

ASSET QUALITY AND NON-PERFORMING ASSETS

Non-covered loans and leases

Non-covered, non-performing loans, which include non-covered, non-accrual loans and non-covered accruing loans past due over 90 days, totaled $123.0 million, or 2.14% of non-covered total loans, at June 30, 2011, as compared to $145.2 million or 2.57% of total non-covered loans, at December 31, 2010. Non-covered non-performing assets, which include non-covered non-performing loans and non-covered OREO, totaled $157.4 million, or 1.37% of total assets, as of June 30, 2011, as compared to $178.0 million, or 1.53% of total assets, as of December 31, 2010.

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A loan is considered impaired when based on current information and events, we determine that we will probably not be able to collect all amounts due according to the loan contract, including scheduled interest payments. Generally, when loans are identified as impaired they are moved to our Special Assets Division. When we identify a loan as impaired, we measure the loan for potential impairment using discounted cash flows, except when the sole remaining source of the repayment for the loan is the liquidation of the collateral. In these cases, we use the current fair value of collateral, less selling costs. The starting point for determining the fair value of collateral is through obtaining external appraisals. Generally, external appraisals are updated every six to nine months. We obtain appraisals from a pre-approved list of independent, third party, local appraisal firms. Approval and addition to the list is based on experience, reputation, character, consistency and knowledge of the respective real estate market. At a minimum, it is ascertained that the appraiser is: (a) currently licensed in the state in which the property is located, (b) is experienced in the appraisal of properties similar to the property being appraised, (c) is actively engaged in the appraisal work, (d) has knowledge of current real estate market conditions and financing trends, (e) is reputable, and (f) is not on Freddie Mac’s nor the Bank’s Exclusionary List of appraisers and brokers. In certain cases appraisals will be reviewed by our Real Estate Valuation Services group to ensure the quality of the appraisal and the expertise and independence of the appraiser. Upon receipt and review, an external appraisal is utilized to measure a loan for potential impairment. Our impairment analysis documents the date of the appraisal used in the analysis, whether the officer preparing the report deems it current, and, if not, allows for internal valuation adjustments with justification. Typical justified adjustments might include discounts for continued market deterioration subsequent to appraisal date, adjustments for the release of collateral contemplated in the appraisal, or the value of other collateral or consideration not contemplated in the appraisal. An appraisal over one year old in most cases will be considered stale dated and an updated or new appraisal will be required. Any adjustments from appraised value to net realizable value are detailed and justified in the impairment analysis, which is reviewed and approved by senior credit quality officers and the Company’s Allowance for Loan and Lease Losses (“ALLL”) Committee. Although an external appraisal is the primary source to value collateral dependent loans, we may also utilize values obtained through purchase and sale agreements, negotiated short sales, broker price opinions, or the sales price of the note. These alternative sources of value are used only if deemed to be more representative of value based on updated information regarding collateral resolution. Impairment analyses are updated, reviewed and approved on a quarterly basis at or near the end of each reporting period. Based on these processes, we do not believe there are significant time lapses for the recognition of additional loan loss provisions or charge-offs from the date they become known.

Non-covered loans are classified as non-accrual when collection of principal or interest is doubtful—generally if they are past due as of maturity or payment of principal or interest by 90 days or more—unless such loans are well-secured and in the process of collection. Additionally, all non-covered loans that are impaired are considered for non-accrual status. Non-covered loans placed on non-accrual will typically remain on non-accrual status until all principal and interest payments are brought current and the prospects for future payments in accordance with the loan agreement appear relatively certain.

Upon acquisition of real estate collateral, typically through the foreclosure process, we promptly begin to market the property for sale. If we do not begin to receive offers or indications of interest we will analyze the price and review market conditions to assess whether a lower price reflects the market value of the property and would enable us to sell the property. In addition, we update appraisals on other real estate owned property six to three months after the most recent appraisal. Increases in valuation adjustments recorded in a period are primarily based on i) updated appraisals received during the period, or ii) management’s authorization to reduce the selling price of the property during the period. Unless a current appraisal is available, an appraisal will be ordered prior to a loan moving to other real estate owned. Foreclosed properties held as other real estate owned are recorded at the lower of the recorded investment in the loan or market value of the property less expected selling costs. Non-covered other real estate owned at June 30, 2011 totaled $34.4 million and consisted of 56 properties.

Non-covered loans are reported as restructured when the Bank grants a concession(s) to a borrower experiencing financial difficulties that it would not otherwise consider. Examples of such concessions include a reduction in the loan rate, forgiveness of principal or accrued interest, extending the maturity date(s) or providing a lower interest rate than would be normally available for a transaction of similar risk. As a result of these concessions, restructured loans are impaired as the Bank will not collect all amounts due, both principal and interest, in accordance with the terms of the original loan agreement. Impairment reserves on non-collateral dependent restructured loans are measured by comparing the present value of expected future cash flows on the restructured loans discounted at the interest rate of the original loan agreement to the loan’s carrying value. These impairment reserves are recognized as a specific component to be provided for in the allowance for loan and lease losses.

The Company has written down impaired, non-covered non-accrual loans as of June 30, 2011 to their estimated net realizable value, based on disposition value, and are expected to be resolved with no additional material loss, absent further decline in market prices. The following table summarizes our non-covered non-performing assets and restructured loans as of June 30, 2011 and December 31, 2010:

Non-covered Non-Performing Assets

74

(in thousands)

	June 30, 2011		December 31, 2010
Non-covered loans on non-accrual status	$	109,889	$	138,177
Non-covered loans past due 90 days or more and accruing		13,137		7,071
Total non-covered non-performing loans		123,026		145,248
Non-covered other real estate owned		34,409		32,791
Total non-covered non-performing assets	$	157,435	$	178,039
Restructured loans (1)	$	80,962	$	84,441
Allowance for loan losses	$	97,795	$	101,921
Reserve for unfunded commitments		988		818
Allowance for credit losses	$	98,783	$	102,739
Asset quality ratios:
Non-covered, non-performing assets to total assets		1.37%		1.53%
Non-covered, non-performing loans to total non-covered loans		2.14%		2.57%
Allowance for loan losses to total non-covered loans		1.71%		1.80%
Allowance for credit losses to total non-covered loans		1.72%		1.82%
Allowance for credit losses to total non-covered non-performing loans		80%		71%

(1) Represents accruing restructured non-covered loans performing according to their restructured terms.

The following tables summarize our non-covered non-performing assets by loan type and region as of June 30, 2011 and December 31, 2010:

Non-covered Non-Performing Assets by Type and Region

(in thousands)

75

	June 30, 2011
	Northwest Oregon		Central Oregon		Southern Oregon		Washington		Greater Sacramento		Northern California		Total
Loans on non-accrual status:
Commercial real estate
Term & multifamily	$	29,216	$	1,002	$	258	$	2,066	$	12,325	$	8,193	$	53,060
Construction & development		921		-		472		-		6,452		83		7,928
Residential development		14,707		-		100		2,400		4,234		4,417		25,858
Commercial
Term		840		1,914		404		183		79		4,815		8,235
LOC & other		6,450		476		130		3,911		1,851		1,990		14,808
Residential
Mortgage		-		-		-		-		-		-		-
Home equity loans & lines		-		-		-		-		-		-		-
Consumer & other		-		-		-		-		-		-		-
Total		52,134		3,392		1,364		8,560		24,941		19,498		109,889
Loans past due 90 days or more and accruing:
Commercial real estate
Term & multifamily	$	555	$	-	$	-	$	-	$	-	$	-	$	555
Construction & development		-		-		-		-		-		-		-
Residential development		-		-		-		-		-		-		-
Commercial
Term		392		-		-		-		358		-		750
LOC & other		-		-		-		5,713		-		-		5,713
Residential
Mortgage		4,467		-		-		-		-		-		4,467
Home equity loans & lines		608		-		-		-		515		-		1,123
Consumer & other		503		-		-		-		26		-		529
Total		6,525		-		-		5,713		899		-		13,137
Total non-performing loans		58,659		3,392		1,364		14,273		25,840		19,498		123,026
Other real estate owned:
Commercial real estate
Term & multifamily	$	3,525	$	500	$	1,291	$	-	$	7,651	$	3,952	$	16,919
Construction & development		2,609		539		-		88		3,524		-		6,760
Residential development		642		1,660		2,371		49		343		2,910		7,975
Commercial
Term		-		-		-		-		-		44		44
LOC & other		283		359		282		270		-		-		1,194
Residential
Mortgage		1,517		-		-		-		-		-		1,517
Home equity loans & lines		-		-		-		-		-		-		-
Consumer & other		-		-		-		-		-		-		-
Total		8,576		3,058		3,944		407		11,518		6,906		34,409
Total non-performing assets	$	67,235	$	6,450	$	5,308	$	14,680	$	37,358	$	26,404	$	157,435

76

	December 31, 2010
	Northwest Oregon		Central Oregon		Southern Oregon		Washington		Greater Sacramento		Northern California		Total
Loans on non-accrual status:
Commercial real estate
Term & multifamily	$	24,180	$	4,816	$	537	$	1,898	$	9,010	$	8,721	$	49,162
Construction & development		12,726		-		472		-		6,817		109		20,124
Residential development		10,191		110		2,122		3,033		10,761		8,369		34,586
Commercial
Term		710		1,679		320		373		98		3,092		6,272
LOC & other		7,586		878		768		6,830		8,628		3,343		28,033
Residential
Mortgage		-		-		-		-		-		-		-
Home equity loans & lines		-		-		-		-		-		-		-
Consumer & other		-		-		-		-		-		-		-
Total		55,393		7,483		4,219		12,134		35,314		23,634		138,177
Loans past due 90 days or more and accruing:
Commercial real estate
Term & multifamily	$	79	$	-	$	-	$	176	$	2,753	$	-	$	3,008
Construction & development		-		-		-		-		-		-		-
Residential development		-		-		-		-		-		-		-
Commercial
Term		-		-		-		-		-		-		-
LOC & other		-		-		-		-		-		-		-
Residential
Mortgage		2,925		-		-		-		-		-		2,925
Home equity loans & lines		73		-		-		-		159		-		232
Consumer & other		880		-		-		-		26		-		906
Total		3,957		-		-		176		2,938		-		7,071
Total non-performing loans		59,350		7,483		4,219		12,310		38,252		23,634		145,248
Other real estate owned:
Commercial real estate
Term & multifamily	$	5,396	$	-	$	1,656	$	-	$	3,091	$	5,686	$	15,829
Construction & development		3,443		539		-		313		4,392		-		8,687
Residential development		674		1,844		1,368		112		-		1,118		5,116
Commercial
Term		-		-		-		-		-		-		-
LOC & other		-		-		-		-		-		-		-
Residential
Mortgage		954		-		-		-		-		-		954
Home equity loans & lines		-		-		-		-		-		-		-
Consumer & other		-		-		-		-		481		1,724		2,205
Total		10,467		2,383		3,024		425		7,964		8,528		32,791
Total non-performing assets	$	69,817	$	9,866	$	7,243	$	12,735	$	46,216	$	32,162	$	178,039

As of June 30, 2011, the non-covered non-performing assets of $157.4 million have been written down by 43%, or $120.7 million, from their original balance of $278.1 million.

The Company is continually performing extensive reviews of our permanent commercial real estate portfolio, including stress testing. These reviews were performed on both our non-owner and owner occupied credits. These reviews were completed to verify leasing status, to ensure the accuracy of risk ratings, and to develop proactive action plans with borrowers on projects where debt service coverage has dropped below the Bank’s benchmark. The stress testing has been performed to determine the effect of rising cap rates, interest rates and vacancy rates, on this portfolio. Based on our analysis, the Company believes our lending teams are effectively managing the risks in this portfolio. There can be no assurance that any further declines in economic conditions, such as potential increases in retail or office vacancy rates, will exceed the projected assumptions utilized in the stress testing and may result in additional non-covered, non-performing loans in the future.

At June 30, 2011 and December 31, 2010, non-covered impaired loans of $81.0 million and $84.4 million were classified as non-covered performing restructured loans, respectively. The restructurings were granted in response to borrower financial difficulty, and generally provide for a temporary modification of loan repayment terms. The non-covered performing restructured loans on accrual status represent the only impaired loans accruing interest at each respective date. In order for a restructured loan to be considered performing and on accrual status, the loan’s collateral coverage generally will be greater than or equal to 100% of the loan balance, the loan is current on payments, and the borrower must either prefund an interest reserve or demonstrate the ability to make payments from a verified source of cash flow. The Company has no obligations to lend additional funds on the restructured loans as of June 30, 2011.

77

The following tables summarize our performing non-covered restructured loans by loan type and region as of June 30, 2011 and December 31, 2010:

Non-covered Restructured Loans by Type and Region

(in thousands)

	June 30, 2011
	Northwest Oregon		Southern Oregon		Washington		Greater Sacramento		Northern California		Total
Commercial real estate
Term & multifamily	$	649	$	3,870	$	-	$	4,673	$	3,513	$	12,705
Construction & development		18,679		-		-		8,183		-		26,862
Residential development		15,174		-		5,284		19,874		-		40,332
Commercial
Term		-		-		-		-		885		885
LOC & other		-		-		-		-		-		-
Residential
Mortgage		178		-		-		-		-		178
Home equity loans & lines		-		-		-		-		-		-
Consumer & other		-		-		-		-		-		-
Total	$	34,680	$	3,870	$	5,284	$	32,730	$	4,398	$	80,962
	December 31, 2010
	Northwest Oregon		Southern Oregon		Washington		Greater Sacramento		Northern California		Total
Commercial real estate
Term & multifamily	$	9,446	$	3,888	$	-	$	11,820	$	3,543	$	28,697
Construction & development		-		-		-		5,434		-		5,434
Residential development		22,277		-		5,330		21,322		-		48,929
Commercial
Term		-		-		-		-		904		904
LOC & other		-		-		-		-		298		298
Residential
Mortgage		179		-		-		-		-		179
Home equity loans & lines		-		-		-		-		-		-
Consumer & other		-		-		-		-		-		-
Total	$	31,902	$	3,888	$	5,330	$	38,576	$	4,745	$	84,441

The following table presents a distribution of our performing non-covered restructured loans by year of maturity, according to the restructured terms, as of June 30, 2011:

(in thousands)

Year	Amount
2011	$	32,510
2012		32,590
2013		-
2014		1,604
2015		1,935
Thereafter		12,323
Total	$	80,962

A further decline in the economic conditions in our general market areas or other factors could adversely impact individual borrowers or the loan portfolio in general. Accordingly, there can be no assurance that loans will not become 90 days or more past due, become impaired or placed on non-accrual status, restructured or transferred to other real estate owned in the future. Additional information about the loan portfolio is provided in Note 4 of the Notes to Condensed Consolidated Financial Statements.

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Covered Non-Performing Assets

Covered non-performing assets totaled $30.2 million, or 0.26% of total assets at June 30, 2011 as compared to $29.9 million, or 0.26% of total assets at December 31, 2010. These covered nonperforming assets are subject to shared-loss agreements with the FDIC. The following tables summarize our covered non-performing assets by loan type as of June 30, 2011 and December 31, 2010:

(in thousands)

	June 30, 2011
	Evergreen		Rainier		Nevada Security		Total
Covered other real estate owned:
Commercial real estate
Term & multifamily	$	2,586	$	209	$	7,598	$	10,393
Construction & development		2,432		1,053		2,734		6,219
Residential development		481		6,470		4,404		11,355
Commercial
Term		280		-		-		280
LOC & other		366		-		-		366
Residential
Mortgage		-		1,540		-		1,540
Home equity loans & lines		-		-		-		-
Consumer & other		-		-		-		-
Total	$	6,145	$	9,272	$	14,736	$	30,153
	December 31, 2010
	Evergreen		Rainier		Nevada Security		Total
Covered other real estate owned:
Commercial real estate
Term & multifamily	$	3,557	$	210	$	8,153	$	11,920
Construction & development		596		-		2,161		2,757
Residential development		2,421		7,252		5,198		14,871
Commercial
Term		315		-		-		315
LOC & other		-		-		-		-
Residential
Mortgage		-		-		-		-
Home equity loans & lines		-		-		-		-
Consumer & other		-		-		-		-
Total	$	6,889	$	7,462	$	15,512	$	29,863

Total non-performing loans and leases

The following tables summarize our total (including covered and non-covered) nonperforming assets at June 30, 2011 and December 31, 2010:

(dollars in thousands)

	June 30, 2011		December 31, 2010
Loans on non-accrual status	$	109,889	$	138,177
Loans past due 90 days or more and accruing		13,137		7,071
Total non-performing loans		123,026		145,248
Other real estate owned		64,562		62,654
Total non-performing assets	$	187,588	$	207,902
Asset quality ratios:
Total non-performing assets to total assets		1.64%		1.78%
Total non-performing loans to total loans		1.91%		2.25%

79

ALLOWANCE FOR NON-COVERED LOAN AND LEASE LOSSES AND

RESERVE FOR UNFUNDED COMMITMENTS

The allowance for non-covered loan and lease losses (“ALLL”) totaled $97.8 million at June 30, 2011, a decrease of $4.1 million from the $101.9 million at December 31, 2010. The decrease in the ALLL from the prior year-end results is principally attributable to net charge-offs exceeding non-covered provision for loan and lease losses. The following table shows the activity in the ALLL for the three and six months ended June 30, 2011 and 2010:

Allowance for Loan and Lease Losses

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Balance at beginning of period	$	97,833		$	110,784		$	101,921		$	107,657
Loans charged off:
Commercial real estate		(12,883	)		(19,605	)		(24,314	)		(35,535	)
Commercial		(3,179	)		(9,961	)		(11,355	)		(32,865	)
Residential		(2,195	)		(1,201	)		(2,929	)		(1,837	)
Consumer & other		(354	)		(787	)		(888	)		(1,076	)
Total loans charged off		(18,611	)		(31,554	)		(39,486	)		(71,313	)
Recoveries:
Commercial real estate		2,208			4,312			3,453			4,596
Commercial		695			370			1,091			649
Residential		100			50			121			170
Consumer & other		111			185			206			282
Total recoveries		3,114			4,917			4,871			5,697
Net charge-offs		(15,497	)		(26,637	)		(34,615	)		(65,616	)
Provision charged to operations		15,459			29,767			30,489			71,873
Balance at end of period	$	97,795		$	113,914		$	97,795		$	113,914
As a percentage of average loans and leases (annualized):
Net charge-offs		1.10%			1.84%			1.24%			2.26%
Provision for loan and lease losses		1.10%			2.06%			1.09%			2.47%
Recoveries as a percentage of charge-offs		16.73%			15.58%			12.34%			7.99%

The decrease in the allowance for loan and lease losses as of June 30, 2011 in relation to the same periods of the prior year is primarily a result the decrease in provision for loan and lease losses which is a result of improving credit quality of the loan portfolio and stabilization of non-performing loans. Additional discussion on the change in provision for loan and lease losses is provided under the heading Provision for Loan and Lease Losses above.

The following table sets forth the allocation of the allowance for non-covered loan and lease losses and percent of loans in each category to total loans (excluding deferred loan fees) as of June 30, 2011 and December 31, 2010:

(dollars in thousands)

	June 30, 2011					December 31, 2010
	Amount		%			Amount		%
Commercial real estate	$	61,982		66	%	$	64,405		68	%
Commercial		23,750		24	%		22,146		22	%
Residential		5,154		9	%		5,926		9	%
Consumer & other		868		1	%		803		1	%
Unallocated		6,041					8,641
Allowance for non-covered loan and lease losses	$	97,795		100	%	$	101,921		100	%

All impaired loans are individually evaluated for impairment. If the measurement of each impaired loans’ value is less than the recorded investment in the loan, we recognize this impairment and adjust the carrying value of the loan to fair value through the allowance for loan and lease losses. This can be accomplished by charging-off the impaired portion of the loan or establishing a specific component within the allowance for loan and lease losses. If in management’s assessment the sources of repayment will not result in a reasonable probability that the carrying value of a loan can be recovered, the amount of a loan’s specific impairment is charged-off against the allowance for loan and lease losses. The Company recognizes the charge-off of impairment reserves on impaired loans in the period they arise for collateral dependent loans. Impairment reserves on non-collateral dependent restructured loans are measured by comparing the present value of expected future cash flows on the restructured loans discounted at the interest rate of the original loan agreement to the loan’s carrying value. These impairment reserves are recognized as a specific component to be provided for in the allowance for loan and lease losses.

80

At June 30, 2011, the recorded investment in non-covered loans classified as impaired totaled $196.6 million, with a corresponding valuation allowance (included in the allowance for loan and lease losses) of $5.7 million. The valuation allowance on impaired loans represents the impairment reserves on performing non-covered restructured loans and one loan included in loans past due 90+ days and accruing. At December 31, 2010, the total recorded investment in non-covered impaired loans was $222.6 million, with a corresponding valuation allowance (included in the allowance for loan and lease losses) of $5.2 million.

The following table presents a summary of activity in the reserve for unfunded commitments (“RUC”):

Summary of Reserve for Unfunded Commitments Activity

(in thousands)

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011		2010
Balance at beginning of period	$	911		$	765		$	818	$	731
Net change to other expense:
Commercial real estate		(15	)		(6	)		28		(16	)
Commerical		84			(21	)		130		26
Residential		7			(4	)		11		(8	)
Consumer & other		1			-			1		1
Total change to other expense		77			(31	)		170		3
Balance at end of period	$	988		$	734		$	988	$	734

We believe that the ALLL and RUC at June 30, 2011 are sufficient to absorb losses inherent in the loan portfolio and credit commitments outstanding as of that date, respectively, based on the best information available. This assessment, based in part on historical levels of net charge-offs, loan growth, and a detailed review of the quality of the loan portfolio, involves uncertainty and judgment. Therefore, the adequacy of the ALLL and RUC cannot be determined with precision and may be subject to change in future periods. In addition, bank regulatory authorities, as part of their periodic examination of the Bank, may require additional charges to the provision for loan and lease losses in future periods if warranted as a result of their review.

ALLOWANCE FOR COVERED LOAN AND LEASE LOSSES

The allowance for non-covered loan and lease losses (“ALLL”) totaled $10.2 million at June 30, 2011, an increase of $7.5 million from the $2.7 million at December 31, 2010. The increase in the covered ALLL from the prior year end results from decreases in the amount and changes in the timing of expected cash flows on the acquired loans compared to those previously estimated, as measured on a pool basis. The following table summarizes activity related to the allowance for covered loan and lease losses by covered loan portfolio segment for the three and six months ended June 30, 2011, respectively:

(dollars in thousands)

81

	Three months ended June  30,			Six months ended June  30,
	2011			2011
Balance at beginning of period	$	8,243		$	2,721
Loans charged off:
Commercial real estate		(742	)		(1,895	)
Commercial		(184	)		(244	)
Residential		(194	)		(823	)
Consumer & other		(659	)		(563	)
Total loans charged off		(1,779	)		(3,525	)
Provision charged to operations		3,755			11,023
Balance at end of period	$	10,219		$	10,219
As a percentage of covered average loans and leases (annualized):
Net charge-offs		0.99%			0.96%
Provision for covered loan and lease losses		2.09%			2.99%

The following table sets forth the allocation of the allowance for covered loan and lease losses and percent of covered loans in each category to total loans as of June 30, 2011 and December 31, 2010:

(in thousands)

	June 30, 2011					December 31, 2010
	Amount		%			Amount		%
Commercial real estate	$	5,714		80	%	$	2,465		79	%
Commercial		2,632		9	%		176		10	%
Residential		1,193		10	%		56		10	%
Consumer & other		680		1	%		24		1	%
Allowance for non-covered loan and lease losses	$	10,219		100	%	$	2,721		100	%

MORTGAGE SERVICING RIGHTS

The following table presents the key elements of our mortgage servicing rights asset for the three and six months ended June 30, 2011 and 2010, respectively:

Summary of Mortgage Servicing Rights

(in thousands)

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Balance, beginning of period	$	15,605		$	13,628		$	14,454		$	12,625
Additions for new mortgage servicing rights capitalized		1,073			938			2,407			2,008
Acquired mortgage servicing rights		—			—			—			62
Changes in fair value:
Due to changes in model inputs or assumptions(1)		(103	)		284			25			129
Other(2)		(225	)		(1,955	)		(536	)		(1,929	)
Balance, end of period	$	16,350		$	12,895		$	16,350		$	12,895

(1) Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.

(2) Represents changes due to collection/realization of expected cash flows over time.

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Information related to our serviced loan portfolio as of June 30, 2011 and December 31, 2010 was as follows:

(dollars in thousands)

	June 30, 2011			December 31, 2010
Balance of loans serviced for others	$	1,751,700		$	1,603,414
MSR as a percentage of serviced loans		0.93	%		0.90	%

GOODWILL AND OTHER INTANGIBLE ASSETS

At June 30, 2011, we had goodwill and other intangible assets of $679.7 million, as compared to $682.0 million at December 31, 2010. The goodwill recorded in connection with acquisitions represents the excess of the purchase price over the estimated fair value of the net assets acquired. At June 30, 2011, we had goodwill of $656.1 million, as compared to $655.9 million at December 31, 2010. Goodwill and other intangible assets with indefinite lives are not amortized but instead are periodically tested for impairment. Management evaluates intangible assets with indefinite lives on an annual basis as of December 31. Additionally, we perform impairment evaluations on an interim basis when events or circumstances indicate impairment potentially exists. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others, a significant decline in our expected future cash flows; a sustained, significant decline in our stock price and market capitalization; a significant adverse change in legal factors or in the business climate; adverse action or assessment by a regulator; and unanticipated competition.

The goodwill impairment test involves a two-step process. The first step compares the fair value of a reporting unit to its carrying value. If the reporting unit’s fair value is less than its carrying value, the Company would be required to proceed to the second step. In the second step the Company calculates the implied fair value of the reporting unit’s goodwill. The implied fair value of goodwill is determined in the same manner as goodwill recognized in a business combination. The estimated fair value of the Company is allocated to all of the Company’s assets and liabilities, including any unrecognized identifiable intangible assets, as if the Company had been acquired in a business combination and the estimated fair value of the reporting unit is the price paid to acquire it. The allocation process is performed only for purposes of determining the amount of goodwill impairment. No assets or liabilities are written up or down, nor are any additional unrecognized identifiable intangible assets recorded as a part of this process. Any excess of the estimated purchase price over the fair value of the reporting unit’s net assets represents the implied fair value of goodwill. If the carrying amount of the goodwill is greater than the implied fair value of that goodwill, an impairment loss would be recognized as a charge to earnings in an amount equal to that excess.

At June 30, 2011, we had other intangible assets of $23.6 million, as compared to $26.1 million at December 31, 2010. Intangible assets with definite useful lives are amortized to their estimated residual values over their respective estimated useful lives, and are also reviewed for impairment. We amortize other intangible assets on an accelerated or straight-line basis over an estimated ten to fifteen year life. No impairment losses separate from the scheduled amortization have been recognized in the periods presented.

DEPOSITS

Total deposits were $9.1 billion at June 30, 2011, a decrease of $287.4 million, or 3.0%, as compared to year-end 2010. The decrease is primarily due to the run-off of higher cost time deposits and the Company reducing interest rates paid on various deposit products consistent with the overall decline in market interest rates.

The following table presents the deposit balances by major category as of June 30, 2011 and December 31, 2010:

Deposits

(dollars in thousands)

	June 30, 2011					December 31, 2010
	Amount		Percentage			Amount		Percentage
Non-interest bearing	$	1,733,640		19	%	$	1,616,687		17	%
Interest bearing demand		873,246		10	%		927,224		10	%
Savings and money market		3,690,089		40	%		3,817,245		41	%
Time, $100,000 or greater		2,024,272		22	%		2,191,055		23	%
Time, less than $100,000		825,165		9	%		881,594		9	%
Total	$	9,146,412		100	%	$	9,433,805		100	%

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The following table presents the average amount of and average rate paid by major category as of the three and six months ended June 30, 2011 and 2010:

(dollars in thousands)

	Three months ended June 30,
	2011					2010
	Average Deposits		Average Rate			Average Deposits		Average Rate
Non-interest bearing	$	1,731,575		0.00	%	$	1,475,852		0.00	%
Interest bearing demand		889,085		0.35	%		961,148		0.50	%
Savings and money market		3,731,931		0.48	%		3,321,982		0.81	%
Time		2,869,203		1.32	%		2,452,535		1.86	%
Total	$	9,221,794				$	8,211,517
	Six months ended June 30,
	2011					2010
	Average Deposits		Average Rate			Average Deposits		Average Rate
Non-interest bearing	$	1,688,254		0.00	%	$	1,462,335		0.00	%
Interest bearing demand		904,296		0.37	%		937,315		0.51	%
Savings and money market		3,757,631		0.50	%		2,993,373		0.84	%
Time		2,924,350		1.34	%		2,632,648		1.70	%
Total	$	9,274,531				$	8,025,671

The Company has an agreement with Promontory Interfinancial Network LLC (“Promontory”) that makes it possible to provide FDIC deposit insurance to balances in excess of current deposit insurance limits. Promontory’s Certificate of Deposit Account Registry Service (“CDARS”) uses a deposit-matching program to exchange Bank deposits in excess of the current deposit insurance limits for excess balances at other participating banks, on a dollar-for-dollar basis, that would be fully insured at the Bank. This product is designed to enhance our ability to attract and retain customers and increase deposits, by providing additional FDIC coverage to customers. CDARS deposits can be reciprocal or one-way. All of the Bank’s CDARS deposits are reciprocal. At June 30, 2011 and December 31, 2010, the Company’s CDARS balances totaled $274.6 million and $323.2 million, respectively. Of these totals, at June 30, 2011 and December 31, 2010, $258.6 million and $300.6 million, respectively, represented time deposits equal to or greater than $100,000 but were fully insured under current deposit insurance limits.

The Dodd-Frank Act provides for unlimited deposit insurance for non-interest bearing transactions accounts, excluding NOW (interest bearing deposit accounts) and including all IOLTAs (lawyers’ trust accounts), beginning December 31, 2010 for a period of two years.

The Dodd-Frank Act permanently raises the current standard maximum federal deposit insurance amount from $100,000 to $250,000 per qualified account.

BORROWINGS

At June 30, 2011, the Bank had outstanding $120.9 million of securities sold under agreements to repurchase and no outstanding federal funds purchased balances. The Bank had outstanding term debt of $256.7 million at June 30, 2011. Term debt outstanding as of June 30, 2011 decreased $6.0 million since December 31, 2010 as a result of repayment of FHLB borrowings and accretion of purchase accounting adjustments. Advances from the FHLB amounted to $245.0 million of the total term debt and are secured by investment securities and residential mortgage loans. The FHLB advances have fixed contractual interest rates ranging from 4.46% to 4.72% and mature in 2016 and 2017.

JUNIOR SUBORDINATED DEBENTURES

We had junior subordinated debentures with carrying values of $184.5 million and $183.6 million at June 30, 2011 and December 31, 2010, respectively.

At June 30, 2011, approximately $219.6 million, or 95% of the total issued amount, had interest rates that are adjustable on a quarterly basis based on a spread over three month LIBOR. Interest expense for junior subordinated debentures increased for the three and six months ended June 30, 2011, compared to the same period in 2010, primarily resulting from increases in short-term market interest rates and LIBOR. Although increases in short-term market interest rates will increase the interest expense for junior subordinated debentures, we believe that other attributes of our balance sheet will serve to mitigate the impact to net interest income on a consolidated basis.

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On January 1, 2007, the Company selected the fair value measurement option for certain pre-existing junior subordinated debentures (the Umpqua Statutory Trusts). The remaining junior subordinated debentures as of the adoption date were acquired through business combinations and were measured at fair value at the time of acquisition. In 2007, the Company issued two series of trust preferred securities and elected to measure each instrument at fair value. Accounting for the junior subordinated debentures originally issued by the Company at fair value enables us to more closely align our financial performance with the economic value of those liabilities. Additionally, we believe it improves our ability to manage the market and interest rate risks associated with the junior subordinated debentures. The junior subordinated debentures measured at fair value and amortized cost are presented as separate line items on the balance sheet. The ending carrying (fair) value of the junior subordinated debentures measured at fair value represents the estimated amount that would be paid to transfer these liabilities in an orderly transaction amongst market participants under current market conditions as of the measurement date.

The significant inputs utilized in the estimation of fair value of these instruments are the credit risk adjusted spread and three month LIBOR. The credit risk adjusted spread represents the nonperformance risk of the liability, contemplating the inherent risk of the obligation. Generally, an increase in the credit risk adjusted spread and/or a decrease in the three month LIBOR will result in positive fair value adjustments. Conversely, a decrease in the credit risk adjusted spread and/or an increase in the three month LIBOR will result in negative fair value adjustments.

Through the first quarter of 2010 we obtained valuations from a third-party pricing service to assist with the estimation and determination of fair value of these liabilities. In these valuations, the credit risk adjusted interest spread for potential new issuances through the primary market and implied spreads of these instruments when traded as assets on the secondary market, were estimated to be significantly higher than the contractual spread of our junior subordinated debentures measured at fair value. The difference between these spreads has resulted in the cumulative gain in fair value, reducing the carrying value of these instruments as reported on our Condensed Consolidated Balance Sheets. In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was signed into law which, among other things, limits the ability of certain bank holding companies to treat trust preferred security debt issuances as Tier 1 capital. This law may require many banks to raise new Tier 1 capital and is expected to effectively close the trust-preferred securities markets from offering new issuances in the future. As a result of this legislation, our third-party pricing service noted that they were no longer to able to provide reliable fair value estimates related to these liabilities given the absence of observable or comparable transactions in the market place in recent history or as anticipated into the future.

Due to inactivity in the junior subordinated debenture market and the inability to obtain observable quotes of our, or similar, junior subordinated debenture liabilities or the related trust preferred securities when traded as assets, we utilize an income approach valuation technique to determine the fair value of these liabilities using our estimation of market discount rate assumptions. The Company monitors activity in the trust preferred and related markets, to the extent available, changes related to the current and anticipated future interest rate environment, and considers our entity-specific creditworthiness, to validate the reasonableness of the credit risk adjusted spread and effective yield utilized in our discounted cash flow model. Additionally, the Company utilizes an external valuation firm to validate the reasonableness of the Company’s assessment of inputs that ultimately determines the estimated fair value of these liabilities. The Company has determined that the underlying inputs and assumptions have not materially changed since that last available third-party valuation.

Absent changes to the significant inputs utilized in the discounted cash flow model used to measure the fair value of these instruments at each reporting period, the cumulative discount for each junior subordinated debenture will reverse over time, ultimately returning the carrying values of these instruments to their notional values at their expected redemption dates, in a manner similar to the effective yield method as if these instruments were accounted for under the amortized cost method. This will result in recognizing losses on junior subordinated debentures carried at fair value on a quarterly basis within non-interest income. For the three and six months ended June 30, 2011 and 2010, we recorded a loss of $547,000 and $1.1 million and no gain and a gain of $6.1 million, respectively, resulting from the change in fair value of the junior subordinated debentures recorded at fair value. Observable activity in the junior subordinated debenture and related markets in future periods may change the effective rate used to discount these liabilities, and could result in additional fair value adjustments (gains or losses on junior subordinated debentures measured at fair value) outside the expected periodic change in fair value had the fair value assumptions remained unchanged.

As noted above, the Dodd-Frank Act limits the ability of certain bank holding companies to treat trust preferred security debt issuances as Tier 1 capital. As the Company had less than $15 billion in assets at December 31, 2009, under the Dodd-Frank Act, the Company will be able to continue to include its existing trust preferred securities, less the common stock of the Trusts, in Tier 1 capital. At June 30, 2011, the Company’s restricted core capital elements were 18% of total core capital, net of goodwill and any associated deferred tax liability.

Additional information regarding junior subordinated debentures measured at fair value is included in Note 16 of the Notes to Condensed Consolidated Financial Statements.

All of the debentures issued to the Trusts, less the common stock of the Trusts, qualified as Tier 1 capital as of June 30, 2011, under guidance issued by the Board of Governors of the Federal Reserve System. Additional information regarding the terms of the junior subordinated debentures, including maturity/redemption dates, interest rates and the fair value election, is included in Note 9 of the Notes to Condensed Consolidated Financial Statements.

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LIQUIDITY AND CASH FLOW

The principal objective of our liquidity management program is to maintain the Bank’s ability to meet the day-to-day cash flow requirements of our customers who either wish to withdraw funds or to draw upon credit facilities to meet their cash needs.

We monitor the sources and uses of funds on a daily basis to maintain an acceptable liquidity position. One source of funds includes public deposits. Individual state laws require banks to collateralize public deposits, typically as a percentage of their public deposit balance in excess of FDIC insurance. Public deposits represent 9.8% of total deposits at June 30, 2011 and 10.3% at December 31, 2010. The amount of collateral required varies by state and may also vary by institution within each state, depending on the individual state’s risk assessment of depository institutions. Changes in the pledging requirements for uninsured public deposits may require pledging additional collateral to secure these deposits, drawing on other sources of funds to finance the purchase of assets that would be available to be pledged to satisfy a pledging requirement, or could lead to the withdrawal of certain public deposits from the Bank. In addition to liquidity from core deposits and the repayments and maturities of loans and investment securities, the Bank can utilize established uncommitted federal funds lines of credit, sell securities under agreements to repurchase, borrow on a secured basis from the FHLB or issue brokered certificates of deposit.

The Bank had available lines of credit with the FHLB totaling $1.6 billion at June 30, 2011 subject to certain collateral requirements, namely the amount of pledged loans and investment securities. The Bank had available lines of credit with the Federal Reserve totaling $433.8 million subject to certain collateral requirements, namely the amount of certain pledged loans. The Bank had uncommitted federal funds line of credit agreements with additional financial institutions totaling $130.0 million at June 30, 2011. Availability of lines is subject to federal funds balances available for loan and continued borrower eligibility. These lines are intended to support short-term liquidity needs, and the agreements may restrict consecutive day usage.

The Company is a separate entity from the Bank and must provide for its own liquidity. Substantially all of the Company’s revenues are obtained from dividends declared and paid by the Bank. There were $5.0 million of dividends paid by the Bank to the Company in the six months ended June 30, 2011. There are statutory and regulatory provisions that could limit the ability of the Bank to pay dividends to the Company. We believe that such restrictions will not have an adverse impact on the ability of the Company to fund its quarterly cash dividend distributions to common shareholders and meet its ongoing cash obligations, which consist principally of debt service on the $230.1 million (issued amount) of outstanding junior subordinated debentures. As of June 30, 2011, the Company did not have any borrowing arrangements of its own.

As disclosed in the Consolidated Statements of Cash Flows, net cash provided by operating activities was $127.7 million during the six months ended June 30, 2011. The difference between cash provided by operating activities and net income largely consisted of non-cash items including a $41.6 million provision for covered and non-covered loan and lease losses.

Net cash of $258.0 million used by investing activities consisted principally of $690.7 million of purchases of investment securities available for sale, net non-covered loan originations of $136.6 million and $16.9 million of purchases of premises and equipment, partially offset by proceeds from investment securities available for sale of $441.7 million, net proceeds from the FDIC indemnification asset of $48.9 million, net covered loan paydowns of $63.4 million, proceeds from the sale of non-covered other real estate owned of $17.0 million, and proceeds from the sale of covered other real estate owned of $7.4 million.

Net cash of $257.9 million used by financing activities primarily consisted of $286.9 million decrease in net deposits, and $11.5 million of dividends paid on common stock, and $5.0 million repayment of term debt, partially offset by $47.1 million increase in net securities sold under agreements to repurchase.

Although we expect the Bank’s and the Company’s liquidity positions to remain satisfactory during 2011, it is possible that our deposit growth for 2011 may not be maintained at previous levels due to pricing pressure or, in order to generate deposit growth, our pricing may need to be adjusted in a manner that results in increased interest expense on deposits.

OFF-BALANCE-SHEET ARRANGEMENTS

Information regarding Off-Balance-Sheet Arrangements is included in Note 10 of the Notes to Condensed Consolidated Financial Statements.

CONCENTRATIONS OF CREDIT RISK

Information regarding Concentrations of Credit Risk is included in Note 10 of the Notes to Condensed Consolidated Financial Statements.

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CAPITAL RESOURCES

Shareholders’ equity at June 30, 2011 was $1.7 billion, an increase of $31.8 million from December 31, 2010. The increase in shareholders’ equity during the six months ended June 30, 2011 was principally due to net income of $31.3 million for the six month period, offset by common stock dividends of $11.5 million.

The following table shows Umpqua Holdings’ consolidated and Umpqua Bank’s capital adequacy ratios, as calculated under regulatory guidelines, compared to the regulatory minimum capital ratio and the regulatory minimum capital ratio needed to qualify as a “well-capitalized” institution at June 30, 2011 and December 31, 2010:

(dollars in thousands)

	Actual					For Capital Adequacy purposes					Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of June 30, 2011
Total Capital (to Risk Weighted Assets)
Consolidated	$	1,279,655		17.48	%	$	585,654		8.00	%	$	732,068		10.00	%
Umpqua Bank	$	1,123,234		15.35	%	$	585,399		8.00	%	$	731,749		10.00	%
Tier 1 Capital (to Risk Weighted Assets)
Consolidated	$	1,188,019		16.22	%	$	292,976		4.00	%	$	439,464		6.00	%
Umpqua Bank	$	1,031,675		14.10	%	$	292,674		4.00	%	$	439,011		6.00	%
Tier 1 Capital (to Average Assets)
Consolidated	$	1,188,019		10.96	%	$	433,584		4.00	%	$	541,979		5.00	%
Umpqua Bank	$	1,031,675		9.52	%	$	433,477		4.00	%	$	541,846		5.00	%
As of December 31, 2010:
Total Capital (to Risk Weighted Assets)
Consolidated	$	1,253,333		17.62	%	$	569,050		8.00	%	$	711,313		10.00	%
Umpqua Bank	$	1,085,839		15.27	%	$	568,874		8.00	%	$	711,093		10.00	%
Tier 1 Capital (to Risk Weighted Assets)
Consolidated	$	1,164,226		16.36	%	$	284,652		4.00	%	$	426,978		6.00	%
Umpqua Bank	$	996,798		14.02	%	$	284,393		4.00	%	$	426,590		6.00	%
Tier 1 Capital (to Average Assets)
Consolidated	$	1,164,226		10.56	%	$	440,995		4.00	%	$	551,243		5.00	%
Umpqua Bank	$	996,798		9.04	%	$	441,061		4.00	%	$	551,326		5.00	%

On February 3, 2010, the Company raised $303.6 million through a public offering by issuing 8,625,000 shares of the Company’s common stock, including 1,125,000 shares pursuant to the underwriters’ over-allotment option, at a share price of $11.00 per share and 18,975,000 depository shares, including 2,475,000 depository shares pursuant to the underwriter’s over-allotment option, also at a price of $11.00 per share. The net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were $288.1 million and qualify as tangible common equity and Tier 1 capital. Proceeds were used to redeem the preferred stock issued to the U.S. Treasury under the TARP CPP, to fund FDIC-assisted acquisition opportunities and for general corporate purposes.

On February 17, 2010, the Company redeemed all of the outstanding Fixed Rate Cumulative Perpetual Preferred Stock, Series A, issued to the U.S. Treasury under the TARP CPP for an aggregate purchase price of $214.2 million. As a result of the repurchase of the Series A preferred stock, the Company incurred a one-time deemed dividend of $9.7 million due to the accelerated amortization of the remaining issuance discount on the preferred stock.

On March 31, 2010, the Company repurchased the common stock warrant issued to the U.S. Treasury pursuant to the TARP CPP, for $4.5 million. The warrant repurchase, together with the Company’s redemption in February 2010 of the entire amount of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, issued to the U.S. Treasury, represents full repayment of all TARP obligations and cancellation of all equity interests in the Company held by the U.S. Treasury.

87

On April 22, 2011, the Company announced that the Board of Directors approved an extension to the expiration date of the common stock repurchase plan from June 30, 2011 to June 30, 2013. As of June 30, 2011, a total of 1.4 million shares remained available for repurchase. There were 120,350 shares repurchased under the repurchase plan during second quarter of 2011. The timing and amount of future repurchases will depend upon the market price for our common stock, securities laws restricting repurchases, asset growth, earnings, and our capital plan. However, there are no longer limitations resulting from the Company’s participation in the TARP CPP. In addition, our stock plans provide that option and restricted stock award holders may pay for the exercise price and tax withholdings in part or whole by tendering previously held shares.

The Company’s dividend policy considers, among other things, earnings, regulatory capital levels, the overall payout ratio and expected asset growth to determine the amount of dividends declared, if any, on a quarterly basis. There is no assurance that future cash dividends on common shares will be declared or increased. The following table presents cash dividends declared and dividend payout ratios (dividends declared per common share divided by basic earnings per common share) for the three and six months ended June 30, 2011 and 2010:

Cash Dividends and Payout Ratios per Common Share

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Dividend declared per common share	$	0.05		$	0.05		$	0.10		$	0.10
Dividend payout ratio		33	%		167	%		37	%		NM

NM - Not meaningful

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our assessment of market risk as of June 30, 2011 indicates there are no material changes in the quantitative and qualitative disclosures from those in our Annual Report on Form 10-K for the year ended December 31, 2010.

Item 4. Controls and Procedures

Our management, including our Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer, has concluded that our disclosure controls and procedures are effective in timely alerting them to information relating to us that is required to be included in our periodic SEC filings. The disclosure controls and procedures were last evaluated by management as of June 30, 2011.

There have been no changes in our internal controls or in other factors that have materially affected or are likely to materially affect our internal controls over financial reporting subsequent to the date of the evaluation.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings

Due to the nature of our business, we are involved in legal proceedings that arise in the ordinary course of our business. While the outcome of these matters is currently not determinable, we do not expect that the ultimate costs to resolve these matters will have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

In May 2011 a putative stockholders derivative action was filed in the U.S. District Court for the District of Oregon by Plumbers Local No. 137 Pension Fund and Laborers’ Local #231 Pension Fund naming Umpqua’s present directors, certain executive officers and PricewaterhouseCoopers LLP (PwC) as defendants and Umpqua as nominal party. The complaint alleges claims for breach of fiduciary duty and duty of loyalty against the directors for approving 2010 executive compensation and for unjust enrichment against the executive officers. The suit seeks unspecified money damages, the return to the Company of any excessive 2010 executive compensation, and the imposition of controls to eliminate any excessive executive compensation, as well as the plaintiffs’ costs and attorney fees. No monetary relief is sought against Umpqua, but the company has obligations to indemnify directors and executive officers in certain circumstances. Umpqua’s directors and executive officers have filed a motion to dismiss the suit. The plaintiffs voluntarily dismissed PwC from the suit.

See Note 10, Commitments and Contingencies, for a discussion of the Company’s involvement in litigation pertaining to Visa, Inc.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed under “Part I—Item 1A—Risk Factors” in our Form 10-K for the year ended December 31, 2010. These factors could materially and adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report.

The Dodd-Frank Act and other recent legislative and regulatory initiatives contain numerous provisions and requirements that will detrimentally affect the Company’s business.

The Dodd-Frank Act and related regulations subject us and other financial institutions to additional restrictions, oversight, reporting obligations and costs, which could have an adverse impact on our business, financial condition, results of operations or the price of our common stock. In addition, this increased regulation of the financial services industry restricts the ability of firms within the industry to conduct business consistent with historical practices, including aspects such as compensation, interest rates, new and inconsistent consumer protection regulations and mortgage regulation, among others. Congress or state legislatures could also adopt laws reducing the amount that borrowers are otherwise contractually required to pay under existing loan contracts, require lenders to extend or restructure certain loans or limit foreclosure and collection remedies. Federal and state regulatory agencies also frequently adopt changes to their regulations or change the manner in which existing regulations are applied.

Effective October 1, 2011, the maximum permissible interchange fee that an issuer may receive for an electronic debit transaction is the sum of $0.21 per transaction plus 5 basis points multiplied by the value of the transaction. The rule allows for an upward adjustment of no more than $0.01 if the issuer develops and implements policies and procedures reasonably designed to achieve fraud-prevention standards. This represents an approximate 50% decrease in interchange revenue on an average transaction. Effective July 21, 2011, Regulation Q, which prohibited the payment of interest on demand deposit account, was repealed and we anticipate that this will result in increased interest expense.

We cannot predict the substance or impact of pending or future legislation or regulation, or the application thereof. Compliance with such current and potential regulation and scrutiny will significantly increase our costs, impede the efficiency of our internal business processes, may require us to increase our regulatory capital and may limit our ability to pursue business opportunities in an efficient manner. In response, we may be required to or choose to raise additional capital, which could have a dilutive effect on the existing holders of our common stock and adversely affect the market price of our common stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not Applicable

(b) Not Applicable

(c) The following table provides information about repurchases of common stock by the Company during the quarter ended June 30, 2011:

Period	Total number of Common  Shares   Purchased (1)		Average Price Paid per  Common Share		Total Number of Shares  Purchased as Part of Publicly Announced Plan (2)		Maximum Number of  Remaining Shares that May be Purchased at Period End under the Plan
4/1/11 - 4/30/11		4,138	$	11.57		-		1,542,945
5/1/11 - 5/31/11		1,039	$	11.70		-		1,542,945
6/1/11 - 6/30/11		12	$	11.09		120,350		1,422,595
Total for quarter		5,189	$	11.59		120,350

(1) Common shares repurchased by the Company during the quarter consisted 120,350 shares repurchased pursuant to the Company’s publicly announced corporate stock repurchase plan described in (2) below, the cancellation of 1,081 restricted stock awards to pay withholding taxes, and 4,108 shares tendered in connection with option exercises.

(2) The repurchase plan, which was approved by the Board and announced in August 2003, originally authorized the repurchase of up to 1.0 million shares. Prior to 2008, the authorization was amended to increase the repurchase limit to 6.0 million shares. On April 21, 2009, the Company announced an extension of the plan’s expiration date to June 30, 2011. On April 22, 2011, the Company announced a further extension of the plan’s expiration date to June 30, 2013.

Item 3. Defaults Upon Senior Securities

Not Applicable

89

Item 4. (Removed and Reserved)

Item 5. Other Information

(a) Not Applicable

(b) Not Applicable

Item 6. Exhibits

The exhibits filed as part of this Report and exhibits incorporated herein by reference to other documents are listed in the Exhibit Index to this Report, which follows the signature page.

90

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	UMPQUA HOLDINGS CORPORATION
	(Registrant)
Dated August 5, 2011	/s/ Raymond P. Davis
	Raymond P. Davis
	President and Chief Executive Officer
Dated August 5, 2011	/s/ Ronald L. Farnsworth
	Ronald L. Farnsworth
	Executive Vice President/ Chief Financial Officer and Principal Financial Officer
Dated August 5, 2011	/s/ Neal T. McLaughlin
	Neal T. McLaughlin
	Executive Vice President/Treasurer and Principal Accounting Officer

91

EXHIBIT INDEX

Exhibit
3.1	(a)	Restated Articles of Incorporation.
3.2	(b)	Bylaws, as amended.
4.1	(c)	Specimen Stock Certificate.
10.1	(d)	Form of Amendment No. 1 to Nonqualified Stock Option Agreements between the Company and Executive Officers that were originally issued January 31, 2011.
10.2	(e)	Form of Amendment No. 1 to Restricted Stock Agreements between the Company and Executive Officers that were originally issued January 31, 2011.
31.1	Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.3	Certification of Principal Accounting Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification of Chief Executive Officer, Principal Financial Officer and Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101. INS XBRL Instance Document *
101. SCH XBRL Taxonomy Extension Schema Document *
101. CAL XBRL Taxonomy Extension Calculation Linkbase Document *
101. DEF XBRL Taxonomy Extension Definition Linkbase Document *
101. LAB XBRL Taxonomy Extension Label Linkbase Document *
101. PRE XBRL Taxonomy Extension Presentation Linkbase Document *

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities and Exchange Act of 1934, as amended and otherwise are not subject to liability under those sections.

(a) Incorporated by reference to Exhibit 3.1 to Form 10-Q filed May 7, 2010.

(b) Incorporated by reference to Exhibit 3.2 to Form 8-K filed April 22, 2008.

(c) Incorporated by reference to Exhibit 4 to the Registration Statement on Form S-8 (No. 333-77259) filed April 28, 1999.

(d) Incorporated by reference to Exhibit 10.1 to Form 8-K filed June 20, 2011.

(e) Incorporated by reference to Exhibit 10.2 to Form 8-K filed June 20, 2011.

92

EX-31.1

EXHIBIT 31.1

Certification

of

Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002

I, Raymond P. Davis, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Umpqua Holdings Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s independent registered public accounting firm and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2011

/s/ Raymond P. Davis

Raymond P. Davis

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification

of

Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002

I, Ronald L. Farnsworth, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Umpqua Holdings Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s independent registered public accounting firm and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2011

/s/ Ronald L. Farnsworth

Ronald L. Farnsworth

Executive Vice President/Chief Financial Officer and

Principal Financial Officer

EX-31.3

EXHIBIT 31.3

Certification

of

Principal Accounting Officer under Section 302 of the Sarbanes-Oxley Act of 2002

I, Neal T. McLaughlin, certify that:

1. I have reviewed this report on Form 10-Q of Umpqua Holdings Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s independent registered public accounting firm and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2011

/s/ Neal T. McLaughlin

Neal T. McLaughlin

Executive Vice President/Treasurer and

Principal Accounting Officer

EX-32

EXHIBIT 32

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER, PRINCIPAL FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING OFFICER

UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This certification is given by the undersigned Chief Executive Officer, Principal Financial Officer and Principal Accounting Officer of Umpqua Holdings Corporation (the “registrant”) pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Each of the undersigned hereby certifies, with respect to the registrant’s quarterly report on Form 10-Q for the period ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the registrant

/s/ Raymond P. Davis

Raymond P. Davis

President and Chief Executive Officer

Umpqua Holdings Corporation

/s/ Ronald L. Farnsworth

Ronald L. Farnsworth

Executive Vice President/Chief Financial Officer and Principal Financial Officer

Umpqua Holdings Corporation

/s/ Neal T. McLaughlin

Neal T. McLaughlin

Executive Vice President/Treasurer and

Principal Accounting Officer

Umpqua Holdings Corporation

August 5, 2011

XML



Derivatives (Summary of Types of Derivatives, Separately by Assets and Liabilities and Fair Value of Derivatives) (Details) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Total asset derivatives	$ 1,979	$ 1,060
Total liability derivatives	1,518	361
Interest Rate Contracts [Member] | Rate Lock Commitments [Member] | Other Assets [Member]
Total asset derivatives	319	306
Interest Rate Contracts [Member] | Rate Lock Commitments [Member] | Other Liabilities [Member]
Total liability derivatives	91	170
Interest Rate Contracts [Member] | Forward Sales Commitments [Member] | Other Assets [Member]
Total asset derivatives	272	754
Interest Rate Contracts [Member] | Forward Sales Commitments [Member] | Other Liabilities [Member]
Total liability derivatives	124	191
Interest Rate Swap [Member] | Other Assets [Member]
Total asset derivatives	1,388
Interest Rate Swap [Member] | Other Liabilities [Member]
Total liability derivatives	$ 1,303

XML



Investment Securities (Roll Forward of Credit Losses of Held-to-Maturity Securities Written Down as Other-than-Temporary Impairment Recognized in Earnings and Other Comprehensive Income) (Details) (USD $) In Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011	Jun. 30, 2010	Mar. 31, 2010
Investment Securities
Balance, beginning of period	$ 12,803	$ 12,778	$ 12,364	$ 12,653
Subsequent OTTI credit losses	47	72	289
Balance, end of period	$ 12,850	$ 12,850	$ 12,653	$ 12,653

XML



Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data	Jun. 30, 2011	Dec. 31, 2010
Condensed Consolidated Balance Sheets
Common stock, par value	$ 0	$ 0
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	114,537,782	114,536,814
Common stock, shares outstanding	114,537,782	114,536,814
Allowance for covered loans	$ 10,219	$ 2,721

XML



Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data	3 Months Ended				6 Months Ended
	Jun. 30, 2011		Jun. 30, 2010		Jun. 30, 2011		Jun. 30, 2010
INTEREST INCOME
Interest and fees on loans	$ 101,547		$ 97,240		$ 201,827		$ 187,948
Interest and dividends on investment securities
Taxable	24,348		15,569		46,391		31,644
Exempt from federal income tax	2,178		2,247		4,343		4,434
Dividends	4		3		7		3
Interest on temporary investments and interest bearing deposits	340		545		741		944
Total interest income	128,417		115,604		253,309		224,973
INTEREST EXPENSE
Interest on deposits	14,698		18,463		30,364		37,252
Interest on securities sold under agreement to repurchase and federal funds purchased	131		123		253		246
Interest on term debt	2,301		2,779		4,590		4,299
Interest on junior subordinated debentures	1,926		1,939		3,839		3,824
Total interest expense	19,056		23,304		39,046		45,621
Net interest income	109,361		92,300		214,263		179,352
PROVISION FOR NON-COVERED LOAN AND LEASE LOSSES	15,459		29,767		30,489		71,873
PROVISION FOR COVERED LOAN AND LEASE LOSSES	3,755				11,023
Net interest income after provision for loan and lease losses	90,147		62,533		172,751		107,479
NON-INTEREST INCOME
Service charges on deposit accounts	8,540		9,585		16,361		17,950
Brokerage commissions and fees	3,276		3,139		6,653		5,778
Mortgage banking revenue, net	4,807		3,209		10,082		6,687
Gain (loss) on investment securities, net
Gain on sale of investment securities, net	5,678				5,678		1
Total other-than-temporary impairment losses	(110)				(110)		(5)
Portion of other-than-temporary impairment losses transferred from other comprehensive income	63				38		(284)
Total gain (loss) on investment securities, net	5,631				5,606		(288)
(Loss) gain on junior subordinated debentures carried at fair value	(547)				(1,089)		6,088
Bargain purchase gain on acquisition							6,437
Change in FDIC indemnification asset	(5,551)		263		(2,646)		873
Other income	3,471		2,367		6,245		5,085
Total non-interest income	19,627		18,563		41,212		48,610
NON-INTEREST EXPENSE
Salaries and employee benefits	43,808		39,604		88,418		75,844
Net occupancy and equipment	12,547		11,472		25,064		22,148
Communications	2,796		2,596		5,606		4,820
Marketing	1,798		1,714		2,649		2,723
Services	6,026		5,831		11,908		10,746
Supplies	843		1,003		1,624		1,729
FDIC assessments	2,821		3,555		6,694		6,999
Net loss (gain) on other real estate owned	3,917		(952)		7,701		1,359
Intangible amortization	1,251		1,368		2,502		2,676
Merger related expenses	71		2,169		252		4,075
Other expenses	7,329		6,473		14,990		11,585
Total non-interest expense	83,207		74,833		167,408		144,704
Income before provision for income taxes	26,567		6,263		46,555		11,385
Provision for (benefit from) income taxes	8,782		2,800		15,303		(592)
Net income	17,785		3,463		31,252		11,977
Preferred stock dividends							12,192
Dividends and undistributed earnings allocated to participating securities	86	[1]	16	[1]	148	[1]	31	[1]
Net earnings (loss) available to common shareholders	$ 17,699		$ 3,447		$ 31,104		$ (246)
Earnings (loss) per common share:
Basic	$ 0.15		$ 0.03		$ 0.27
Diluted	$ 0.15		$ 0.03		$ 0.27
Weighted average number of common shares outstanding:
Basic	114,611		110,135		114,593		101,205
Diluted	114,785		114,733		114,796		101,435

[1] Represents dividends paid and undistributed earnings allocated to nonvested restricted stock awards.

XML



Covered Assets and FDIC Indemnification Asset (Summary of Activity in Covered Other Real Estate Owned) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Covered Assets and FDIC Indemnification Asset
Balance, beginning of period	$ 27,689,000.000	$ 8,995,000.000	$ 29,863,000.000
Acquisition		17,938,000.000		26,939,000.000
Additions to covered OREO	5,632,000.000	2,560,000.000	8,668,000.000	2,669,000.000
Dispositions of covered OREO	(2,503,000.000)	(1,198,000.000)	(6,457,000.000)	(1,313,000.000)
Valuation adjustments in the period	(665,000.000)	(5,000.000)	(1,921,000.000)	(5,000.000)
Balance, end of period	$ 30,153,000.000	$ 28,290,000.000	$ 30,153,000.000	$ 28,290,000.000

XML



Investment Securities (Investment Securities Pledged to Secure Borrowings and Public Deposits) (Details) (USD $) In Thousands	Jun. 30, 2011
Investment Securities
To Federal Home Loan Bank to secure borrowings, Amortized Cost	$ 226,584
To Federal Home Loan Bank to secure borrowings, Fair Value	237,852
To state and local governments to secure public deposits, Amortized Cost	599,429
To state and local governments to secure public deposits, Fair Value	622,425
Other securities pledged, Amortized Cost	163,987
Other securities pledged, Fair Value	165,943
Total pledged securities, Amortized Cost	990,000
Total pledged securities, Fair Value	$ 1,026,220

XML



Shareholders' Equity (Narrative) (Details) (USD $)	0 Months Ended			3 Months Ended			6 Months Ended		12 Months Ended
	Apr. 21, 2010	Mar. 31, 2010	Feb. 03, 2010	Jun. 30, 2011	Jun. 30, 2010	Mar. 31, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010	Apr. 20, 2010
Common stock raised through a public offer			$ 303,600,000						$ 89,786,000
Common stock shares raised through a public offer			8,625,000
Common stock, shares pursuant to the underwriters' over-allotment option			1,125,000
Underwriter's over-allotment option price per share			$ 11.00
Common stock, depository shares			18,975,000
Common stock, depository shares pursuant to underwriters over-allotment option			2,475,000
Common stock, depository share price per share			$ 11.00
Depository shares, fractional interests			0.01
Proceeds from issuance of common and preferred stock, net			288,100,000
Redeemed fixed rate cumulative perpetual preferred stock						214,200,000			214,181,000
Repurchase of warrants issued to U.S. Treasury		4,500,000							4,500,000
Common stock, shares authorized	200,000,000			200,000,000			200,000,000		200,000,000	100,000,000
Conversion of preferred stock to common stock, shares	100
Compensation cost relates to stock options, restricted stock and restricted stock units				868,000	799,000		1,987,000	1,425,000
Total income tax benefit recognized related to stock-based compensation				347,000	320,000		795,000	570,000
Restricted stock share based compensation arrangement by share based payment award award vesting period							5
Total intrinsic value of options exercised				32,000	93,000		147,000	382,000
Cash received from exercise of stock options				97,000	153,000		309,000	917,000
Total fair value of restricted stock units vested and released				0	0
Restricted stock units at fair value							677,000	213,000
Total unrecognized compensation cost related to nonvested stock options				3,200,000			3,200,000
Income tax benefits received				58,000	54,000		633,000	380,000
Tax deficiency from stock options exercised							251,000	205,000
Nonvested Stock [Member]
Expected recognized over a weighted-average period, years							2.9
Preferred Stock [Member]
Common stock, depository shares outstanding			18,975,000
Restricted Stock [Member]
Total fair value of restricted stock units vested and released				114,000	51,000		765,000	538,000
Total unrecognized compensation cost related to nonvested stock options				4,600,000			4,600,000
Expected recognized over a weighted-average period, years							3.0
Nonvested Restricted Stock Units (RSUs) [Member]
Total unrecognized compensation cost related to nonvested stock options				$ 1,000,000			$ 1,000,000
Expected recognized over a weighted-average period, years							1.6

XML



Income Taxes (Details) (USD $)	6 Months Ended
	Jun. 30, 2011
Income Taxes
Gross unrecognized tax benefits	$ 555,000
Effective income tax rate on unrecognized tax benefits that would impact effective tax rate	0.40%
Recognized benefit in interest	6,000
Accrued interest related to unrecognized tax benefits	$ 177,000

XML



Earnings Per Common Share

6 Months Ended

Jun. 30, 2011

Earnings Per Common Share

Earnings Per Common Share

Note 14 – Earnings Per Common Share

Nonvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and are included in the computation of EPS pursuant to the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Certain of the Company's nonvested restricted stock awards qualify as participating securities.

Net earnings, less any preferred dividends accumulated for the period (whether or not declared), is allocated between the common stock and participating securities pursuant to the two-class method. Basic earnings per common share is computed by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding during the period, excluding participating nonvested restricted shares.

Diluted earnings per common share is computed in a similar manner, except that first the denominator is increased to include the number of additional common shares that would have been outstanding if potentially dilutive common shares, excluding the participating securities, were issued using the treasury stock method. For all periods presented, warrants, stock options, certain restricted stock awards and restricted stock units are the only potentially dilutive non-participating instruments issued by the Company. Next, we determine and include in diluted earnings per common share calculation the more dilutive effect of the participating securities using the treasury stock method or the two-class method. Undistributed losses are not allocated to the nonvested share-based payment awards (the participating securities) under the two-class method as the holders are not contractually obligated to share in the losses of the Company.

The following is a computation of basic and diluted earnings (loss) per common share for the three and six months ended June 30, 2011 and 2010:

(in thousands, except per share data)

	Three months ended     June  30,				Six months ended     June 30,
	2011		2010		2011		2010
NUMERATORS:
Net income	$	17,785	$	3,463	$	31,252	$	11,977
Less:
Preferred stock dividends		-		-		-		12,192
Dividends and undistributed earnings allocated to participating securities (1)		86		16		148		31
Net earnings (loss) available to common shareholders	$	17,699	$	3,447	$	31,104	$	(246)
DENOMINATORS:
Weighted average number of common shares outstanding - basic		114,611		110,135		114,593		101,205
Effect of potentially dilutive common shares (2)		174		220		203		230
Preferred convertible stock		-		4,378		-		-
Weighted average number of common shares outstanding - diluted		114,785		114,733		114,796		101,435
EARNINGS (LOSS) PER COMMON SHARE:
Basic	$	0.15	$	0.03	$	0.27	$	-
Diluted	$	0.15	$	0.03	$	0.27	$	-

(1) Represents dividends paid and undistributed earnings allocated to nonvested restricted stock awards.

(2) Represents the effect of the assumed exercise of warrants, assumed exercise of stock options, vesting of non-participating restricted shares, and vesting of restricted stock units, based on the treasury stock method.

The following table presents the weighted average outstanding securities that were not included in the computation of diluted earnings per common share because their effect would be anti-dilutive for the three and six months ended June 30, 2011 and 2010.

(in thousands)

	Three months ended     June  30,				Six months ended     June 30,
	2011		2010		2011		2010
Stock options		1,859		1,287		1,833		1,233
CPP warrant		-		-		-		552
Non-participating, nonvested restricted shares		-		10		-		11
Restricted stock units		-		-		-		-
		1,859		1,297		1,833		1,796

XML



Commitments and Contingencies (Summary of Commitments and Contingent Liabilities) (Details) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Commitments and contingent liabilities
Commitments to Extend Credit [Member]
Commitments and contingent liabilities	1,199,041
Commitments to Extend Overdrafts [Member]
Commitments and contingent liabilities	239,788
Commitments to Originate Loans Held for Sale [Member]
Commitments and contingent liabilities	67,591
Forward Sales Commitments [Member]
Commitments and contingent liabilities	106,000
Standby Letters of Credit [Member]
Commitments and contingent liabilities	$ 59,501

XML



Document and Entity Information	6 Months Ended
	Jun. 30, 2011	Jul. 29, 2011
Document and Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2011
Entity Registrant Name	UMPQUA HOLDINGS CORP
Entity Central Index Key	0001077771
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		114,538,506
Entity Filer Category	Large Accelerated Filer

XML



Investment Securities (Other-than-Temporary Impairment Losses, Investment Securities) (Details) (USD $) In Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2011		Jun. 30, 2010		Jun. 30, 2011		Jun. 30, 2010
Investment Securities
Total other-than-temporary impairment losses	$ 110				$ 110		$ 5
Portion of other-than-temporary impairment losses transferred from (recognized in) other comprehensive income	(63)	[1]		[1]	(38)	[1]	284	[1]
Net impairment losses recognized in earnings	$ 47	[2]		[2]	$ 72	[2]	$ 289	[2]

[1] Represents other-than-temporary impairment losses related to all other factors.

[2] Represents other-than-temporary impairment losses related to credit losses.

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Business Combinations Accounting Policies (Policy)

6 Months Ended

Jun. 30, 2011

Business Combinations

Business Combinations Policy [Policy Text Block]

The assets acquired and liabilities assumed from the Evergreen, Rainier, and Nevada Security acquisitions have been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the acquisition dates. The fair values of the assets acquired and liabilities assumed were determined based on the requirements of the Fair Value Measurements and Disclosures topic of the Financial Accounting Standards Board Accounting Standards Codification (the "FASB ASC"). The amounts are subject to adjustments based upon final settlement with the FDIC. In addition, the tax treatment of FDIC-assisted acquisitions is complex and subject to interpretations that may result in future adjustments of deferred taxes as of the acquisition date. The terms of the agreements provide for the FDIC to indemnify the Bank against claims with respect to liabilities of Evergreen, Rainier, and Nevada Security not assumed by the Bank and certain other types of claims identified in the agreement. The application of the acquisition method of accounting resulted in the recognition of a bargain purchase gain of $6.4 million in the Evergreen acquisition, $35.8 million of goodwill in the Rainier acquisition and $10.4 million of goodwill in the Nevada Security acquisition.

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Investment Securities (Schedule of Fair Value and Unrealized Losses of Securities) (Details) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Available-for-sale Securities, Less than 12 Months, Fair Value	$ 719,883	$ 1,298,593
Available-for-sale Securities, Less than 12 Months, Unrealized Losses	3,937	21,334
Available-for-sale Securities, 12 Months or Longer, Fair Value	6,457	2,652
Available-for-sale Securities, 12 Months or Longer, Unrealized Losses	37	31
Available-for-sale Securities, Fair Value	726,340	1,301,245
Available-for-sale Securities, Unrealized Losses	3,974	21,365
Held-to-maturity Securities, 12 Months or Longer, Fair Value	345	658
Held-to-maturity Securities, 12 Months or Longer, Unrealized Losses	25	209
Held-to-maturity Securities, Fair Value	345	658
Held-to-maturity Securities, Unrealized Losses	25	209
U.S. Treasury and Agencies [Member]
Available-for-sale Securities, Less than 12 Months, Fair Value
Available-for-sale Securities, Less than 12 Months, Unrealized Losses
Available-for-sale Securities, 12 Months or Longer, Fair Value		110
Available-for-sale Securities, 12 Months or Longer, Unrealized Losses		1
Available-for-sale Securities, Fair Value		110
Available-for-sale Securities, Unrealized Losses		1
Obligations of States and Political Subdivisions [Member]
Available-for-sale Securities, Less than 12 Months, Fair Value	10,716	60,110
Available-for-sale Securities, Less than 12 Months, Unrealized Losses	210	1,366
Available-for-sale Securities, 12 Months or Longer, Fair Value	1,831	1,003
Available-for-sale Securities, 12 Months or Longer, Unrealized Losses	17	22
Available-for-sale Securities, Fair Value	12,547	61,113
Available-for-sale Securities, Unrealized Losses	227	1,388
Residential Mortgage-Backed Securities and Collateralized Mortgage Obligations [Member]
Available-for-sale Securities, Less than 12 Months, Fair Value	709,167	1,238,483
Available-for-sale Securities, Less than 12 Months, Unrealized Losses	3,727	19,968
Available-for-sale Securities, 12 Months or Longer, Fair Value	4,476	1,539
Available-for-sale Securities, 12 Months or Longer, Unrealized Losses	18	8
Available-for-sale Securities, Fair Value	713,643	1,240,022
Available-for-sale Securities, Unrealized Losses	3,745	19,976
Held-to-maturity Securities, 12 Months or Longer, Fair Value	345	658
Held-to-maturity Securities, 12 Months or Longer, Unrealized Losses	25	209
Held-to-maturity Securities, Fair Value	345	658
Held-to-maturity Securities, Unrealized Losses	$ 25	$ 209

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Junior Subordinated Debentures (Narrative) (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010	Dec. 31, 2009
Junior Subordinated Debentures
Common Stock Issued By Trust Owned		$ 6,900,000
Total assets	11,459,692,000	11,459,692,000		11,668,710,000	15,000,000,000
Restricted Core Capital Percentage	18.00%	18.00%
Gain Loss On Changes In Fair Value Of Junior Subordinated Debentures	$ (547,000)	$ (1,089,000)	$ 6,088,000

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Investment Securities

6 Months Ended

Jun. 30, 2011

Investment Securities

Investment Securities

Note 3 – Investment Securities

The following table presents the amortized costs, unrealized gains, unrealized losses and approximate fair values of investment securities at June 30, 2011 and December 31, 2010:

June 30, 2011

(in thousands)

	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
AVAILABLE FOR SALE:
U.S. Treasury and agencies	$	117,392	$	1,561	$	-	$	118,953
Obligations of states and political subdivisions		213,053		10,072		(227)		222,898
Residential mortgage-backed securities and collateralized mortgage obligations		2,782,517		54,657		(3,745)		2,833,429
Other debt securities		152		-		(2)		150
Investments in mutual funds and other equity securities		1,959		71		-		2,030
	$	3,115,073	$	66,361	$	(3,974)	$	3,177,460
HELD TO MATURITY:
Obligations of states and political subdivisions	$	1,945	$	3	$	-	$	1,948
Residential mortgage-backed securities and collateralized mortgage obligations		3,608		202		(25)		3,785
	$	5,553	$	205	$	(25)	$	5,733

December 31, 2010

(in thousands)

	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
AVAILABLE FOR SALE:
U.S. Treasury and agencies	$	117,551	$	1,239	$	(1)	$	118,789
Obligations of states and political subdivisions		213,129		4,985		(1,388)		216,726
Residential mortgage-backed securities and collateralized mortgage obligations		2,543,974		57,506		(19,976)		2,581,504
Other debt securities		152		-		-		152
Investments in mutual funds and other equity securities		1,959		50				2,009
	$	2,876,765	$	63,780	$	(21,365)	$	2,919,180
HELD TO MATURITY:
Obligations of states and political subdivisions	$	2,370	$	5	$	-	$	2,375
Residential mortgage-backed securities and collateralized mortgage obligations		2,392		216		(209)		2,399
	$	4,762	$	221	$	(209)	$	4,774

Investment securities that were in an unrealized loss position as of June 30, 2011 and December 31, 2010 are presented in the following tables, based on the length of time individual securities have been in an unrealized loss position. In the opinion of management, these securities are considered only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and not due to concerns regarding the underlying credit of the issuers or the underlying collateral.

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
AVAILABLE FOR SALE:
Obligations of states and political subdivisions		10,716		210		1,831		17		12,547		227
Residential mortgage-backed securities and collateralized mortgage obligations		709,167		3,727		4,476		18		713,643		3,745
Other debt securities		-		-		150		2		150		2
Total temporarily impaired securities	$	719,883	$	3,937	$	6,457	$	37	$	726,340	$	3,974
HELD TO MATURITY:
Residential mortgage-backed securities and collateralized mortgage obligations	$	-	$	-	$	345	$	25	$	345	$	25
Total temporarily impaired securities	$	-	$	-	$	345	$	25	$	345	$	25

December 31, 2010

(in thousands)

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
AVAILABLE FOR SALE:
U.S. Treasury and agencies	$	-	$	-	$	110	$	1	$	110	$	1
Obligations of states and political subdivisions		60,110		1,366		1,003		22		61,113		1,388
Residential mortgage-backed securities and collateralized mortgage obligations		1,238,483		19,968		1,539		8		1,240,022		19,976
Total temporarily impaired securities	$	1,298,593	$	21,334	$	2,652	$	31	$	1,301,245	$	21,365
HELD TO MATURITY:
Residential mortgage-backed securities and collateralized mortgage obligations	$	-	$	-	$	658	$	209	$	658	$	209
Total temporarily impaired securities	$	-	$	-	$	658	$	209	$	658	$	209

The unrealized losses on obligations of political subdivisions were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities. Management monitors published credit ratings of these securities and no adverse ratings changes have occurred since the date of purchase of obligations of political subdivisions which are in an unrealized loss position as of June 30, 2011. Because the decline in fair value is attributable to changes in interest rates or widening market spreads and not credit quality, and because the Bank does not intend to sell the securities in this class and it is not likely that Bank will be required to sell these securities before recovery of their amortized cost basis, which may include holding each security until maturity, the unrealized losses on these investments are not considered other-than-temporarily impaired.

All of the available for sale residential mortgage-backed securities and collateralized mortgage obligations portfolio in an unrealized loss position at June 30, 2011 are issued or guaranteed by governmental agencies. The unrealized losses on residential mortgage-backed securities and collateralized mortgage obligations were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities, and not concerns regarding the underlying credit of the issuers or the underlying collateral. It is expected that these securities will not be settled at a price less than the amortized cost of each investment. Because the decline in fair value is attributable to changes in interest rates or widening market spreads and not credit quality, and because the Bank does not intend to sell the securities in this class and it is not likely that the Bank will be required to sell these securities before recovery of their amortized cost basis, which may include holding each security until contractual maturity, the unrealized losses on these investments are not considered other-than-temporarily impaired.

We review investment securities on an ongoing basis for the presence of other-than-temporary impairment ("OTTI") or permanent impairment, taking into consideration current market conditions, fair value in relationship to cost, extent and nature of the change in fair value, issuer rating changes and trends, whether we intend to sell a security or if it is likely that we will be required to sell the security before recovery of our amortized cost basis of the investment, which may be maturity, and other factors. For debt securities, if we intend to sell the security or it is likely that we will be required to sell the security before recovering its cost basis, the entire impairment loss would be recognized in earnings as an OTTI. If we do not intend to sell the security and it is not likely that we will be required to sell the security but we do not expect to recover the entire amortized cost basis of the security, only the portion of the impairment loss representing credit losses would be recognized in earnings. The credit loss on a security is measured as the difference between the amortized cost basis and the present value of the cash flows expected to be collected. Projected cash flows are discounted by the original or current effective interest rate depending on the nature of the security being measured for potential OTTI. The remaining impairment related to all other factors, the difference between the present value of the cash flows expected to be collected and fair value, is recognized as a charge to other comprehensive income ("OCI"). Impairment losses related to all other factors are presented as separate categories within OCI. For investment securities held to maturity, this amount is accreted over the remaining life of the debt security prospectively based on the amount and timing of future estimated cash flows. The accretion of the impairment related to factors other than credit amount recorded in OCI will increase the carrying value of the investment, and would not affect earnings. If there is an indication of additional credit losses the security is re-evaluated accordingly to the procedures described above.

The following tables present the OTTI losses for the three and six months ended June 30, 2011 and 2010:

(in thousands)

 

	Three months ended June 30,
	2011		2010
Total other-than-temporary impairment losses	$	110	$	-
Portion of other-than-temporary impairment losses recognized in other comprehensive income (1)		(63)		-
Net impairment losses recognized in earnings (2)	$	47	$	-
		Six months ended June 30,
	2011		2010
Total other-than-temporary impairment losses	$	110	$	5
Portion of other-than-temporary impairment losses (recognized in) transferred from other comprehensive income (1)		(38)		284
Net impairment losses recognized in earnings (2)	$	72	$	289

(1) Represents other-than-temporary impairment losses related to all other factors.

(2) Represents other-than-temporary impairment losses related to credit losses.

The OTTI recognized on investment securities held to maturity relate to non-agency residential collateralized mortgage obligations. Each of these securities holds various levels of credit subordination. The underlying mortgage loans of these securities were originated from 2003 through 2007. At origination, the weighted average loan-to-value of the underlying mortgages was 69%; the underlying borrowers had weighted average FICO scores of 731, and 59% were limited documentation loans. These securities are valued by third-party pricing services using matrix or model pricing methodologies and were corroborated by broker indicative bids. We estimate cash flows of the underlying collateral for each security considering credit, interest and prepayment risk models that incorporate management's estimate of projected key assumptions including prepayment rates, collateral default rates and loss severity. Assumptions utilized vary from security to security, and are influenced by factors such as loan interest rates, geographic location, borrower characteristics and vintage, and historical experience. We then used a third party to obtain information about the structure of each security, including subordination and other credit enhancements, in order to determine how the underlying collateral cash flows will be distributed to each security issued in the structure. These cash flows are then discounted at the interest rate used to recognize interest income on each security. We review the actual collateral performance of these securities on a quarterly basis and update the inputs as appropriate to determine the projected cash flows. The following table presents a summary of the significant inputs utilized to measure management's estimate of the credit loss component on these non-agency collateralized mortgage obligations as of June 30, 2011 and 2010:

	2011			2010
	Range		Weighted	Range		Weighted
	Minimum	Maximum	Average	Minimum	Maximum	Average
Constant prepayment rate	5.0%	20.0%	14.4%	4.0%	25.0%	14.9%
Collateral default rate	5.0%	30.0%	13.2%	8.0%	45.0%	16.8%
Loss severity	30.0%	65.0%	39.0%	20.0%	50.0%	34.6%

The following table presents a roll forward of the credit loss component of held to maturity debt securities that have been written down for OTTI with the credit loss component recognized in earnings and the remaining impairment loss related to all other factors recognized in OCI for the three and six months ended June 30, 2011 and 2010:

(in thousands)

	Three months ended June 30,
	2011		2010
Balance, beginning of period	$	12,803	$	12,653
Subsequent OTTI credit losses		47		-
Balance, end of period	$	12,850	$	12,653

(in thousands)

	Six months ended June 30,
	2011		2010
Balance, beginning of period	$	12,778	$	12,364
Subsequent OTTI credit losses		72		289
Balance, end of period	$	12,850	$	12,653

The following table presents the maturities of investment securities at June 30, 2011:

(in thousands)

	Available For Sale				Held To Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
AMOUNTS MATURING IN:
Three months or less	$	17,296	$	17,379	$	590	$	591
Over three months through twelve months		287,207		294,045		85		85
After one year through five years		1,992,369		2,037,495		613		618
After five years through ten years		750,874		761,393		49		50
After ten years		65,368		65,118		4,216		4,389
Other investment securities		1,959		2,030		-		-
	$	3,115,073	$	3,177,460	$	5,553	$	5,733

The amortized cost and fair value of collateralized mortgage obligations and mortgage-backed securities are presented by expected average life, rather than contractual maturity, in the preceding table. Expected maturities may differ from contractual maturities because borrowers have the right to prepay underlying loans without prepayment penalties.

The following table presents the gross realized gains and gross realized losses on the sale of securities available for sale for the three and six months ended June 30, 2011 and 2010:

(in thousands)

	Three months ended June 30, 2011				Three months ended June 30, 2010
	Gains		Losses		Gains		Losses
Obligations of states and political subdivisions	$	7	$	-	$	-	$	-
Residential mortgage-backed securities and collateralized mortgage obligations		6,475		804		-		-
	$	6,482	$	804	$	-	$	-
	Six months ended June 30, 2011				Six months ended June 30, 2010
	Gains		Losses		Gains		Losses
Obligations of states and political subdivisions	$	7	$	-	$	2	$	1
Residential mortgage-backed securities and collateralized mortgage obligations		6,475		804		-		-
	$	6,482	$	804	$	2	$	1

The following table presents, as of June 30, 2011, investment securities which were pledged to secure borrowings and public deposits as permitted or required by law:

(in thousands)

	Amortized Cost		Fair Value
To Federal Home Loan Bank to secure borrowings	$	226,584	$	237,852
To state and local governments to secure public deposits		599,429		622,425
Other securities pledged		163,987		165,943
Total pledged securities	$	990,000	$	1,026,220

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Derivatives (Policy)

6 Months Ended

Jun. 30, 2011

Derivatives

Derivatives, Policy [Policy Text Block]

The Company may use derivatives to hedge the risk of changes in the fair values of interest rate lock commitments, residential mortgage loans held for sale, and mortgage servicing rights. None of the Company's derivatives are designated as hedging instruments. Rather, they are accounted for as free-standing derivatives, or economic hedges, with changes in the fair value of the derivatives reported in income. The Company primarily utilizes forward interest rate contracts in its derivative risk management strategy.

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Business Combinations (Schedule of Net Assets (Liabilities) Received from the FDIC and the Estimated Fair Value Adjustments) (Details) (USD $)	6 Months Ended					0 Months Ended							0 Months Ended							0 Months Ended
	Jun. 30, 2010	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Mar. 31, 2010	Jan. 22, 2010 Evergreen Bank [Member]	Jan. 22, 2010 Evergreen Bank [Member] Fair Value Adjustments [Member]	Jun. 30, 2011 Evergreen Bank [Member]	Mar. 31, 2011 Evergreen Bank [Member]	Dec. 31, 2010 Evergreen Bank [Member]	Jun. 30, 2010 Evergreen Bank [Member]	Mar. 31, 2010 Evergreen Bank [Member]	Feb. 26, 2010 Rainier Pacific Bank [Member]	Feb. 26, 2010 Rainier Pacific Bank [Member] Fair Value Adjustments [Member]	Jun. 30, 2011 Rainier Pacific Bank [Member]	Mar. 31, 2011 Rainier Pacific Bank [Member]	Dec. 31, 2010 Rainier Pacific Bank [Member]	Jun. 30, 2010 Rainier Pacific Bank [Member]	Mar. 31, 2010 Rainier Pacific Bank [Member]	Jun. 18, 2010 Nevada Security Bank [Member]	Jun. 18, 2010 Nevada Security Bank [Member] Fair Value Adjustments [Member]	Jun. 30, 2011 Nevada Security Bank [Member]	Mar. 31, 2011 Nevada Security Bank [Member]	Dec. 31, 2010 Nevada Security Bank [Member]	Jun. 30, 2010 Nevada Security Bank [Member]
Cost basis net assets (liabilities)							$ 58,811,000	$ 58,800,000						$ (50,295,000)	$ 50,300,000						$ 53,629,000	$ 53,600,000
Cash payment received from (paid to) the FDIC														59,351,000	59,400,000						(29,950,000)	30,000,000
Loans		5,637,758,000		5,557,066,000			(117,449,000)							(103,137,000)							(112,975,000)
Other Real Estate Owned							(2,422,000)							(6,581,000)							(17,939,000)
Other intangible assets							440,000							6,253,000							322,000
FDIC indemnification asset	225,354,000.000	116,928,000.000	131,872,000.000	146,413,000.000	141,955,000.000		71,755,000	36,118,000.000	40,379,000.000	40,606,000.000	72,068,000.000	71,696,000.000		76,603,000	35,999,000.000	37,875,000.000	43,726,000.000	54,598,000.000	70,259,000.000		99,160,000	44,811,000.000	53,618,000.000	62,081,000.000	98,688,000.000
Deposits		(9,146,412,000)		(9,433,805,000)			(1,023,000)							(1,828,000)							(1,950,000)
Term debt							(2,496,000)							(13,035,000)
Other assets		205,883,000		242,465,000			(1,179,000)							(3,139,000)							(690,000)
Bargain purchase gain on acquisition	(6,437,000)					(6,437,000)	6,437,000
(goodwill)														$ (35,808,000)	$ 27,500,000						$ (10,393,000)	$ 36,500,000

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Shareholders' Equity (Tables)

6 Months Ended

Jun. 30, 2011

Shareholders' Equity

Summary of Stock Option Activity

	Six months ended June 30, 2011
	Options       Outstanding		Weighted-Avg     Exercise Price		Weighted-Avg   Remaining Contractual   Term (Years)		Aggregate     Intrinsic Value
Balance, beginning of period		2,067	$	14.82
Granted		237	$	11.01
Exercised		(40)	$	7.67
Forfeited/expired		(87)	$	15.62
Balance, end of period		2,177	$	14.50		6.00	$	1,692
Options exercisable, end of period		1,284	$	16.36		4.22	$	1,288

Schedule of Weighted Average Assumptions for Stock Options Granted

	Six months ended              June 30,
	2011		2010
Dividend yield		2.79%		2.73%
Expected life (years)		7.1		7.1
Expected volatility		52%		52%
Risk-free rate		2.71%		3.04%
Weighted average fair value of options on date of grant	$	4.65	$	5.18

Summary of Nonvested Restricted Share Activity

	Six months ended June 30, 2011
	Restricted Shares         Outstanding		Weighted Average  Grant         Date Fair Value
Balance, beginning of period		401	$	15.29
Granted		279	$	11.02
Released		(68)	$	18.57
Forfeited/expired		(13)	$	13.31
Balance, end of period		599	$	12.98

Schedule Of Sharebased Compensation Restricted Stock Activity

	Six months ended June 30, 2011
	Restricted Stock Units         Outstanding		Weighted Average  Grant         Date Fair Value
Balance, beginning of period		225	$	11.13
Granted		105	$	10.42
Released		(63)	$	14.33
Forfeited/expired		(48)	$	14.33
Balance, end of period		219	$	9.17

XML



Fair Value Measurement (Narrative) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2011
Carrying value of loans fully charged-off	$ 0
Visa Class B Common Stock [Member]
Discount on fair value of common stock	5.00%

XML



Fair Value Measurement

6 Months Ended

Jun. 30, 2011

Fair Value Measurement

Fair Value Measurement

Note 16 – Fair Value Measurement

The following table presents estimated fair values of the Company's financial instruments as of June 30, 2011 and December 31, 2010, whether or not recognized or recorded at fair value in the Condensed Consolidated Balance Sheets:

(in thousands)

	June 30, 2011				December 31, 2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
FINANCIAL ASSETS:
Cash and cash equivalents	$	615,882	$	615,882	$	1,004,125	$	1,004,125
Trading securities		2,522		2,522		3,024		3,024
Securities available for sale		3,177,460		3,177,460		2,919,180		2,919,180
Securities held to maturity		5,553		5,733		4,762		4,774
Loans held for sale		60,416		60,416		75,626		75,626
Non-covered loans and leases, net		5,637,758		5,691,957		5,557,066		5,767,506
Covered loans and leases, net		698,676		783,045		785,898		893,682
Restricted equity securities		32,839		32,839		34,475		34,475
Mortgage servicing rights		16,350		16,350		14,454		14,454
Bank owned life insurance assets		91,169		91,169		90,161		90,161
FDIC indemnification asset		116,928		63,211		146,413		90,011
Derivatives		1,979		1,979		1,060		1,060
Visa Class B common stock		-		311		-		15,987
FINANCIAL LIABILITIES:
Deposits	$	9,146,412	$	9,149,607	$	9,433,805	$	9,464,406
Securities sold under agreements to repurchase		120,889		120,889		73,759		73,759
Term debt		256,719		278,406		262,760		282,127
Junior subordinated debentures, at fair value		81,766		81,766		80,688		80,688
Junior subordinated debentures, at amortized cost		102,705		66,799		102,866		65,771
Derivatives		1,518		1,518		361		361

The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 and December 31, 2010:

(in thousands)

	Fair Value at June 30, 2011
Description	Total		Level 1		Level 2		Level 3
Trading securities
Obligations of states and political subdivisions	$	501	$	501	$	-	$	-
Equity securities		1,926		1,926		-		-
Other investments securities(1)		95		95		-		-
Available for sale securities
U.S. Treasury and agencies		118,953		-		118,953		-
Obligations of states and political subdivisions		222,898		-		222,898		-
Residential mortgage-backed securities and collateralized mortgage obligations		2,833,429		-		2,833,429		-
Other debt securities		150		-		150		-
Investments in mutual funds and other equity securities		2,030		-		2,030		-
Mortgage servicing rights, at fair value		16,350		-		-		16,350
Derivatives		1,979		-		1,979		-
Total assets measured at fair value	$	3,198,311	$	2,522	$	3,179,439	$	16,350
Junior subordinated debentures, at fair value		81,766		-		-		81,766
Derivatives		1,518		-		1,518		-
Total liabilities measured at fair value	$	83,284	$	-	$	1,518	$	81,766

(in thousands)

	Fair Value at December 31, 2010
Description	Total		Level 1		Level 2		Level 3
Trading securities
Obligations of states and political subdivisions	$	1,282	$	1,282	$	-	$	-
Equity securities		1,645		1,645		-		-
Other investments securities(1)		97		97		-		-
Available for sale securities
U.S. Treasury and agencies		118,789		-		118,789		-
Obligations of states and political subdivisions		216,726		-		216,726		-
Residential mortgage-backed securities and collateralized mortgage obligations		2,581,504		-		2,581,504		-
Other debt securities		152		-		152		-
Investments in mutual funds and other equity securities		2,009		-		2,009		-
Mortgage servicing rights, at fair value		14,454		-		-		14,454
Derivatives		1,060		-		1,060		-
Total assets measured at fair value	$	2,937,718	$	3,024	$	2,920,240	$	14,454
Junior subordinated debentures, at fair value	$	80,688	$	-	$	-	$	80,688
Derivatives		361		-		361		-
Total liabilities measured at fair value	$	81,049	$	-	$	361	$	80,688

(1) Principally represents U.S. Treasury and agencies or residential mortgage-backed securities issued or guaranteed by governmental agencies.

The following methods were used to estimate the fair value of each class of financial instrument above:

Cash and Cash Equivalents - For short-term instruments, including cash and due from banks, and interest bearing deposits with banks, the carrying amount is a reasonable estimate of fair value.

Securities - Fair values for investment securities are based on quoted market prices when available or through the use of alternative approaches, such as matrix or model pricing, or broker indicative bids, when market quotes are not readily accessible or available.

Loans Held For Sale - For loans held for sale, carrying value approximates fair value.

Non-covered Loans and Leases - Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type, including commercial, real estate and consumer loans. Each loan category is further segregated by fixed and variable rate. For variable rate loans, carrying value approximates fair value. Effective in the second quarter of 2010, the fair value of fixed rate loans is calculated by discounting contractual cash flows at rates which similar loans are currently being made. These amounts are discounted further by embedded probable losses expected to be realized in the portfolio.

Covered Loans and Leases - Covered loans are initially measured at their estimated fair value on their date of acquisition as described in Note 6. Subsequent to acquisition, the fair value of covered loans is measured using the same methodology as that of non-covered loans.

Restricted Equity Securities - The carrying value of restricted equity securities approximates fair value as the shares can only be redeemed by the issuing institution at par.

Mortgage Servicing Rights - The fair value of mortgage servicing rights is estimated using a discounted cash flow model. Assumptions used include market discount rates, anticipated prepayment speeds, delinquency and foreclosure rates, and ancillary fee income. This model is periodically validated by an independent external model validation group. The model assumptions and the MSR fair value estimates are also compared to observable trades of similar portfolios as well as to MSR broker valuations and industry surveys, as available. Management believes the significant inputs utilized are indicative of those that would be used by market participants.

Bank Owned Life Insurance Assets - Fair values of insurance policies owned are based on the insurance contract's cash surrender value.

FDIC Indemnification Asset -The FDIC indemnification asset is calculated as the expected future cash flows under the loss-share agreement discounted by a rate reflective of the creditworthiness of the FDIC as would be required from the market.

Visa Class B Common Stock - The fair value of Visa Class B common stock is estimated by applying a 5% discount to the value of the unredeemed Class A equivalent shares. The discount primarily represents the risk related to the further potential reduction of the conversion ratio between Class B and Class A shares and a liquidity risk premium.

Deposits - The fair value of deposits with no stated maturity, such as non-interest bearing deposits, savings and interest checking accounts, and money market accounts, is equal to the amount payable on demand as of June 30, 2011 and December 31, 2010. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities.

Securities Sold under Agreements to Repurchase and Federal Funds Purchased - For short-term instruments, including securities sold under agreements to repurchase and federal funds purchased, the carrying amount is a reasonable estimate of fair value.

Term Debt - The fair value of medium term notes is calculated based on the discounted value of the contractual cash flows using current rates at which such borrowings can currently be obtained.

Junior Subordinated Debentures - The fair value of junior subordinated debentures is estimated using an income approach valuation technique. The ending carrying (fair) value of the junior subordinated debentures measured at fair value represents the estimated amount that would be paid to transfer these liabilities in an orderly transaction amongst market participants. Due to credit concerns in the capital markets and inactivity in the trust preferred markets that have limited the observability of market spreads, we have classified this as a Level 3 fair value measure. 

Derivative Instruments - The fair value of the derivative instruments is estimated using quoted or published market prices for similar instruments, adjusted for factors such as pull-through rate assumptions based on historical information, where appropriate.

The following table provides a reconciliation of assets and liabilities measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and six months ended June 30, 2011 and 2010.

(in thousands)

Three months ended June 30,	Beginning Balance		Change included in earnings			Purchases and issuances		Sales and settlements			Ending Balance		Net change in unrealized gains or (losses) relating to items held at end of period
2011
Mortgage servicing rights	$	15,605	$	(328	)	$	1,073	$	-		$	16,350	$	(45	)
Junior subordinated debentures		81,220		1,523			-		(977	)		81,766		1,523
2010
Mortgage servicing rights	$	13,628	$	(1,671	)	$	938	$	-		$	12,895	$	(1,368	)
Junior subordinated debentures		79,563		984			-		(957	)		79,590		984

(in thousands)

Six months ended June 30,	Beginning Balance		Change included in earnings			Purchases, issuances and settlements		Sales and settlements			Ending Balance		Net change in unrealized gains or (losses) relating to items held at end of period
2011
Mortgage servicing rights	$	14,454	$	(511	)	$	2,407	$	-		$	16,350	$	79
Junior subordinated debentures		80,688		3,033			-		(1,955	)		81,766		3,033
2010
Mortgage servicing rights	$	12,625	$	(1,800	)	$	2,070	$	-		$	12,895	$	(1,263	)
Junior subordinated debentures		85,666		(4,150	)		-		(1,926	)		79,590		(4,150	)

Gains (losses) on mortgage servicing rights carried at fair value are recorded in mortgage banking revenue within other non-interest income. Gains (losses) on junior subordinated debentures carried at fair value within other non-interest income. The contractual interest expense on the junior subordinated debentures is recorded on an accrual basis as interest on junior subordinated debentures within interest expense. Settlements related to the junior subordinated debentures represent the payment of accrued interest that is embedded in the fair value of these liabilities.

Management believes that the credit risk adjusted spread being utilized is indicative of the nonperformance risk premium a willing market participant would require under current market conditions, that is, the inactive market. Management attributes the change in fair value of the junior subordinated debentures during the period to market changes in the nonperformance expectations and pricing of this type of debt, and not as a result of changes to our entity-specific credit risk. The widening of the credit risk adjusted spread above the Company's contractual spreads has primarily contributed to the positive fair value adjustments. Future contractions in the credit risk adjusted spread relative to the spread currently utilized to measure the Company's junior subordinated debentures at fair value as of June 30, 2011, or the passage of time, will result in negative fair value adjustments. Generally, an increase in the credit risk adjusted spread and/or a decrease in the three month LIBOR swap curve will result in positive fair value adjustments. Conversely, a decrease in the credit risk adjusted spread and/or an increase in the three month LIBOR swap curve will result in negative fair value adjustments.

Additionally, from time to time, certain assets are measured at fair value on a nonrecurring basis. These adjustments to fair value generally result from the application of lower-of-cost-or-market accounting or write-downs of individual assets due to impairment. The following table presents information about the Company's assets and liabilities measured at fair value on a nonrecurring basis for which a nonrecurring change in fair value has been recorded during the reporting period. The amounts disclosed below represent the fair values at the time the nonrecurring fair value measurements were made, and not necessarily the fair value as of the dates reported upon.

(in thousands)

	June 30, 2011
Description	Total		Level 1		Level 2		Level 3
Investment securities, held to maturity
Residential mortgage-backed securities and collateralized mortgage obligations	$	217	$	-	$	-	$	217
Non-covered loans and leases		51,968		-		-		51,968
Non-covered other real estate owned		7,270		-		-		7,270
Covered other real estate owned		5,963		-		-		5,963
	$	65,418	$	-	$	-	$	65,418
	December 31, 2010
Description	Total		Level 1		Level 2		Level 3
Investment securities, held to maturity
Residential mortgage-backed securities and collateralized mortgage obligations	$	1,226	$	-	$	-	$	1,226
Non-covered loans and leases		74,639		-		-		74,639
Non-covered other real estate owned		7,958		-		-		7,958
Covered other real estate owned		8,708						8,708
	$	92,531	$	-	$	-	$	92,531

The following table presents the losses resulting from nonrecurring fair value adjustments for the three and six months ended June 30, 2011 and 2010:

(in thousands)

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Investment securities, held to maturity
Residential mortgage-backed securities and collateralized mortgage obligations	$	47	$	-	$	72	$	289
Non-covered loans and leases		17,278		31,449		33,194		64,589
Non-covered other real estate owned		3,388		814		5,518		1,721
Covered other real estate owned		665		-		1,921		-
Total loss from nonrecurring measurements	$	21,378	$	32,263	$	40,705	$	66,599

The investment securities held to maturity above relate to non-agency collateralized mortgage obligations where other-than-temporary impairment ("OTTI") has been identified and the investments have been adjusted to fair value. The fair value of these investments securities were obtained from third-party pricing services using matrix or model pricing methodologies and were corroborated by broker indicative bids. While we do not expect to recover the entire amortized cost basis of these securities, as we as we do not intend to sell these securities and it is not likely that we will be required to sell these securities before maturity, only the credit loss component of the impairment is recognized in earnings. The credit loss on a security is measured as the difference between the amortized cost basis and the present value of the cash flows expected to be collected. The remaining impairment loss related to all other factors, the difference between the present value of the cash flows expected to be collected and fair value, is recognized as a charge to a separate component other comprehensive income ("OCI"). We estimate the cash flows of the underlying collateral within each security considering credit, interest and prepayment risk models that incorporate management's estimate of projected key assumptions including prepayment rates, collateral default rates and loss severity. Assumptions utilized vary from security to security, and are influenced by factors such as loan interest rates, geographic location, borrower characteristics and vintage, and historical experience. We then use a third party to obtain information about the structure of each security, including subordination and other credit enhancements, in order to determine how the underlying collateral cash flows will be distributed to each security issued in the structure. These cash flows are then discounted at the interest rate used to recognize interest income on each security.

The non-covered loans and leases amount above represents impaired, collateral dependent loans that have been adjusted to fair value. When we identify a collateral dependent loan as impaired, we measure the impairment using the current fair value of the collateral, less selling costs. Depending on the characteristics of a loan, the fair value of collateral is generally estimated by obtaining external appraisals. If we determine that the value of the impaired loan is less than the recorded investment in the loan, we recognize this impairment and adjust the carrying value of the loan to fair value through the allowance for loan and lease losses. The loss represents charge-offs or impairments on collateral dependent loans for fair value adjustments based on the fair value of collateral. The carrying value of loans fully charged-off is zero.

The non-covered and covered other real estate owned amount above represents impaired real estate that has been adjusted to fair value. Non-covered other real estate owned represents real estate which the Bank has taken control of in partial or full satisfaction of loans. At the time of foreclosure, other real estate owned is recorded at the lower of the carrying amount of the loan or fair value less costs to sell, which becomes the property's new basis. Any write-downs based on the asset's fair value at the date of acquisition are charged to the allowance for loan and lease losses. After foreclosure, management periodically performs valuations such that the real estate is carried at the lower of its new cost basis or fair value, net of estimated costs to sell. Fair value adjustments on other real estate owned are recognized within net loss on real estate owned. The loss represents impairments on non-covered other real estate owned for fair value adjustments based on the fair value of the real estate.

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Non-covered Other Real Estate Owned

6 Months Ended

Jun. 30, 2011

Non-covered Other Real Estate Owned

Non-covered Other Real Estate Owned

Note 8 – Non-covered Other Real Estate Owned

The following table presents the changes in non-covered other real estate owned ("OREO") for the three and six months ended June 30, 2011 and 2010:

(in thousands)

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Balance, beginning of period	$	34,512		$	18,872		$	32,791		$	24,566
Additions to OREO		15,419			11,888			25,322			17,895
Dispositions of OREO		(12,134	)		(4,293	)		(18,186	)		(15,087	)
Valuation adjustments in the period		(3,388	)		(814	)		(5,518	)		(1,721	)
Balance, end of period	$	34,409		$	25,653		$	34,409		$	25,653

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Condensed Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Condensed Consolidated Statements of Comprehensive Income
Reclassification adjustment for net gains realized in earnings, tax expense	$ 2,271		$ 2,271	$ 1
Unrealized gains related to factors other than credit, tax expense (benefit)	35		30	69
Reclassification adjustment for impairments realized in net income, tax benefit	10		20	116
Accretion of unrealized losses related to factors other than credit to investment securities held to maturity, tax benefit	$ 10	$ 34	$ 27	$ 74

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Non-covered Other Real Estate Owned (Tables)

6 Months Ended

Jun. 30, 2011

Non-covered Other Real Estate Owned

Schedule of Changes in Non-covered Other Real Estate Owned

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Balance, beginning of period	$	34,512		$	18,872		$	32,791		$	24,566
Additions to OREO		15,419			11,888			25,322			17,895
Dispositions of OREO		(12,134	)		(4,293	)		(18,186	)		(15,087	)
Valuation adjustments in the period		(3,388	)		(814	)		(5,518	)		(1,721	)
Balance, end of period	$	34,409		$	25,653		$	34,409		$	25,653

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Allowance for Non-Covered Loan Loss and Credit Quality

6 Months Ended

Jun. 30, 2011

Allowance for Non-Covered Loan Loss and Credit Quality

Allowance for Non-Covered Loan Loss and Credit Quality

Note 5 – Allowance for Non-Covered Loan Loss and Credit Quality

Allowance for Non-Covered Loan and Lease Losses

The Bank has a management Allowance for Loan and Lease Losses ("ALLL") Committee, which is responsible for, among other things, regularly reviewing the ALLL methodology, including loss factors, and ensuring that it is designed and applied in accordance with generally accepted accounting principles. The ALLL Committee reviews and approves loans and leases recommended for impaired status. The ALLL Committee also approves removing loans and leases from impaired status. The Bank's Audit and Compliance Committee provides board oversight of the ALLL process and reviews and approves the ALLL methodology on a quarterly basis.

Our methodology for assessing the appropriateness of the ALLL consists of three key elements, which include 1) the formula allowance; 2) the specific allowance; and 3) the unallocated allowance. By incorporating these factors into a single allowance requirement analysis, all risk-based activities within the loan portfolio are simultaneously considered.

Formula Allowance

The Bank performs regular credit reviews of the loan and lease portfolio to determine the credit quality and adherence to underwriting standards. When loans and leases are originated, they are assigned a risk rating that is reassessed periodically during the term of the loan through the credit review process. The Company's risk rating methodology assigns risk ratings ranging from 1 to 10, where a higher rating represents higher risk. The 10 risk rating categories are a primary factor in determining an appropriate amount for the formula allowance.

The formula allowance is calculated by applying risk factors to various segments of pools of outstanding loans. Risk factors are assigned to each portfolio segment based on management's evaluation of the losses inherent within each segment. Segments or regions with greater risk of loss will therefore be assigned a higher risk factor.

Base risk – The portfolio is segmented into loan categories, and these categories are assigned a Base Risk factor based on an evaluation of the loss inherent within each segment.

Extra risk – Additional risk factors provide for an additional allocation of ALLL based on the loan risk rating system and loan delinquency, and reflect the increased level of inherent losses associated with more adversely classified loans.

Changes to risk factors – Risk factors are assigned at origination and may be changed periodically based on management's evaluation of the following factors: loss experience; changes in the level of non-performing loans; regulatory exam results; changes in the level of adversely classified loans (positive or negative); improvement or deterioration in local economic conditions; and any other factors deemed relevant.

Specific Allowance

Regular credit reviews of the portfolio also identify loans that are considered potentially impaired. Potentially impaired loans are referred to the ALLL Committee which reviews and approves designated loans as impaired. A loan is considered impaired when based on current information and events, we determine that we will probably not be able to collect all amounts due according to the loan contract, including scheduled interest payments. When we identify a loan as impaired, we measure the impairment using discounted cash flows, except when the sole remaining source of the repayment for the loan is the liquidation of the collateral. In these cases, we use the current fair value of the collateral, less selling costs, instead of discounted cash flows. If we determine that the value of the impaired loan is less than the recorded investment in the loan, we either recognize an impairment reserve as a Specific Allowance to be provided for in the allowance for loan and lease losses or charge-off the impaired balance on collateral dependent loans if it is determined that such amount represents a confirmed loss. Loans determined to be impaired with a specific allowance are excluded from the formula allowance so as not to double-count the loss exposure. The non-accrual impaired loans as of period end have already been partially charged off to their estimated net realizable value, and are expected to be resolved over the coming quarters with no additional material loss, absent further decline in market prices.

The combination of the formula allowance component and the specific allowance component lead to an allocated allowance for loan and lease losses.

Unallocated Allowance

The Bank may also maintain an unallocated allowance amount to provide for other credit losses inherent in a loan and lease portfolio that may not have been contemplated in the credit loss factors. This unallocated amount generally comprises less than 10% of the allowance, but may be maintained at higher levels during times of deteriorating economic conditions characterized by falling real estate values. The unallocated amount is reviewed quarterly with consideration of factors including, but not limited to:

• Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;

• Changes in international, national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments;

• Changes in the nature and volume of the portfolio and in the terms of loans;

• Changes in the experience and ability of lending management and other relevant staff;

• Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified or graded loans;

• Changes in the quality of the institution's loan review system;

• Changes in the value of underlying collateral for collateral-depending loans;

• The existence and effect of any concentrations of credit, and changes in the level of such concentrations;

• The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institutions' existing portfolio.

These factors are evaluated through a management survey of the Chief Credit Officer, Chief Lending Officers, Special Asset Manager, and Credit Review Manager. The survey requests responses to evaluate current changes in the nine qualitative factors. This information is then incorporated into our understanding of the reasonableness of the formula factors and our evaluation of the unallocated portion of the ALLL.

Management believes that the ALLL was adequate as of June 30, 2011. There is, however, no assurance that future loan losses will not exceed the levels provided for in the ALLL and could possibly result in additional charges to the provision for loan and lease losses. In addition, bank regulatory authorities, as part of their periodic examination of the Bank, may require additional charges to the provision for loan and lease losses in future periods if warranted as a result of their review. Approximately 80% of our loan portfolio is secured by real estate, and a significant decline in real estate market values may require an increase in the allowance for loan and lease losses. The U.S. recession, the housing market downturn, and declining real estate values in our markets have negatively impacted aspects of our residential development, commercial real estate, commercial construction and commercial loan portfolios. A continued deterioration in our markets may adversely affect our loan portfolio and may lead to additional charges to the provision for loan and lease losses.

The reserve for unfunded commitments ("RUC") is established to absorb inherent losses associated with our commitment to lend funds, such as with a letter or line of credit. The adequacy of the ALLL and RUC are monitored on a regular basis and are based on management's evaluation of numerous factors. For each portfolio segment, these factors include:

• The quality of the current loan portfolio;

• The trend in the loan portfolio's risk ratings;

• Current economic conditions;

• Loan concentrations;

• Loan growth rates;

• Past-due and non-performing trends;

• Evaluation of specific loss estimates for all significant problem loans;

• Historical short (one year), medium (three year), and long-term charge-off rates,

• Recovery experience;

• Peer comparison loss rates.

There have been no significant changes to the Bank's methodology or policies in the periods presented.

Activity in the Non-Covered Allowance for Loan and Lease Losses

The following tables summarizes activity related to the allowance for non-covered loan and lease losses by non-covered loan portfolio segment for the three and six months ended June 30, 2011 and 2010, respectively:

(in thousands)

	Three Months Ended June 30, 2011
	Commercial      Real Estate		Commercial		Residential		Consumer   & Other		Unallocated			Total
Balance, beginning of period	$	63,528	$	20,798	$	5,626	$	856	$	7,025		$	97,833
Charge-offs		(12,883)		(3,179)		(2,195)		(354)		-			(18,611)
Recoveries		2,208		695		100		111		-			3,114
Provision		9,129		5,436		1,623		255		(984	)		15,459
Balance, end of period	$	61,982	$	23,750	$	5,154	$	868	$	6,041		$	97,795
	Three Months Ended June 30, 2010
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Unallocated			Total
Balance, beginning of period	$	70,460	$	20,890	$	8,235	$	863	$	10,336		$	110,784
Charge-offs		(19,605)		(9,961)		(1,201)		(787)		-			(31,554)
Recoveries		4,312		370		50		185		-			4,917
Provision		13,048		8,548		2,689		587		4,895			29,767
Balance, end of period	$	68,215	$	19,847	$	9,773	$	848	$	15,231		$	113,914
	Six Months Ended June 30, 2011
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Unallocated			Total
Balance, beginning of period	$	64,405	$	22,146	$	5,926	$	803	$	8,641		$	101,921
Charge-offs		(24,314)		(11,355)		(2,929)		(888)		-			(39,486)
Recoveries		3,453		1,091		121		206		-			4,871
Provision		18,438		11,868		2,036		747		(2,600)			30,489
Balance, end of period	$	61,982	$	23,750	$	5,154	$	868	$	6,041		$	97,795
	Six Months Ended June 30, 2010
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Unallocated			Total
Balance, beginning of period	$	67,281	$	24,583	$	5,811	$	455	$	9,527		$	107,657
Charge-offs		(35,535)		(32,865)		(1,837)		(1,076)		-			(71,313)
Recoveries		4,596		649		170		282		-			5,697
Provision		31,873		27,480		5,629		1,187		5,704			71,873
Balance, end of period	$	68,215	$	19,847	$	9,773	$	848	$	15,231		$	113,914

The following table presents the allowance and recorded investment in non-covered loans by portfolio segment and balances individually or collectively evaluated for impairment as of June 30, 2011 and 2010, respectively:

(in thousands)

	June 30, 2011
	Commercial   Real Estate		Commercial		Residential		Consumer & Other		Unallocated		Total
Allowance for non-covered loans and leases:
Collectively evaluated for impairment	$	59,277	$	20,812	$	5,136	$	868	$	6,041	$	92,134
Individually evaluated for impairment		2,705		2,938		18		-		-		5,661
Total	$	61,982	$	23,750	$	5,154	$	868	$	6,041	$	97,795
Non-covered loans and leases:
Collectively evaluated for impairment	$	3,663,034	$	1,330,749	$	522,309	$	34,584			$	5,550,676
Individually evaluated for impairment		166,464		29,921		178		-				196,563
Total	$	3,829,498	$	1,360,670	$	522,487	$	34,584			$	5,747,239

	June 30, 2010
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Unallocated		Total
Allowance for non-covered loans and leases:
Collectively evaluated for impairment	$	61,127	$	19,836	$	9,548	$	848	$	15,231	$	106,590
Individually evaluated for impairment		7,088		11		225		-				7,324
Total	$	68,215	$	19,847	$	9,773	$	848	$	15,231	$	113,914
Non-covered loans and leases:
Collectively evaluated for impairment	$	3,783,102	$	1,203,558	$	465,633	$	34,215			$	5,486,508
Individually evaluated for impairment		194,373		52,295		4,502		-				251,170
Total	$	3,977,475	$	1,255,853	$	470,135	$	34,215			$	5,737,678

(1) The gross non-covered loan and lease balance excludes deferred loans fees of $11.7 million at June 30, 2011 and $11.0 million at June 30, 2010.

Summary of Reserve for Unfunded Commitments Activity

The following tables present a summary of activity in the reserve for unfunded commitments ("RUC") and unfunded commitments for the three and six months ended June 30, 2011 and 2010, respectively:

(in thousands)

	Three Months Ended June 30, 2011
	Commercial     Real Estate		Commercial		Residential		Consumer   & Other		Total
Balance, beginning of period	$	76	$	621	$	162	$	52	$	911
Net change to other expense		(15)		84		7		1		77
Balance, end of period	$	61	$	705	$	169	$	53	$	988
	Three Months Ended June 30, 2010
	Commercial     Real Estate		Commercial		Residential		Consumer   & Other		Total
Balance, beginning of period	$	47	$	531	$	140	$	47	$	765
Net change to other expense		(6)		(21)		(4)		-		(31)
Balance, end of period	$	41	$	510	$	136	$	47	$	734
	Six Months Ended June 30, 2011
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Balance, beginning of period	$	33	$	575	$	158	$	52	$	818
Net change to other expense		28		130		11		1		170
Balance, end of period	$	61	$	705	$	169	$	53	$	988
	Six Months Ended June 30, 2010
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Balance, beginning of period	$	57	$	484	$	144	$	46	$	731
Net change to other expense		(16)		26		(8)		1		3
Balance, end of period	$	41	$	510	$	136	$	47	$	734
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Unfunded commitments:
June 30, 2011	$	61,478	$	674,210	$	226,790	$	45,483	$	1,007,961
June 30, 2010		41,354		501,667		209,643		39,938		792,602

Non-covered loans sold

In the course of managing the loan portfolio, at certain times, management may decide to sell loans prior to resolution. The following table summarizes loans sold by loan portfolio during the three and six months ended June 30, 2011 and 2010, respectively:

(in thousands)

	Three months ended June 30				Six months ended June 30
	2011		2010		2011		2010
Commercial real estate
Term & multifamily	$	1,385	$	969	$	3,884	$	10,728
Construction & development		-		-		-		1,175
Residential development		-		1,399		2		5,434
Commercial
Term		-		3,210		151		3,210
LOC & other		-		-		2,740		462
Total	$	1,385	$	5,578	$	6,777	$	21,009

Asset Quality and Non-Performing Loans

We manage asset quality and control credit risk through diversification of the non-covered loan portfolio and the application of policies designed to promote sound underwriting and loan monitoring practices. The Bank's Credit Quality Group is charged with monitoring asset quality, establishing credit policies and procedures and enforcing the consistent application of these policies and procedures across the Bank. Reviews of non-performing, past due non-covered loans and larger credits, designed to identify potential charges to the allowance for loan and lease losses, and to determine the adequacy of the allowance, are conducted on an ongoing basis. These reviews consider such factors as the financial strength of borrowers, the value of the applicable collateral, loan loss experience, estimated loan losses, growth in the loan portfolio, prevailing economic conditions and other factors.

A loan is considered impaired when based on current information and events, we determine it is probable that we will not be able to collect all amounts due according to the loan contract, including scheduled interest payments. Generally, when loans are identified as impaired they are moved to our Special Assets Division. When we identify a loan as impaired, we measure the loan for potential impairment using discounted cash flows, except when the sole remaining source of the repayment for the loan is the liquidation of the collateral. In these cases, we use the current fair value of collateral, less selling costs. The starting point for determining the fair value of collateral is through obtaining external appraisals. Generally, external appraisals are updated every six to nine months. We obtain appraisals from a pre-approved list of independent, third party, local appraisal firms. Approval and addition to the list is based on experience, reputation, character, consistency and knowledge of the respective real estate market. At a minimum, it is ascertained that the appraiser is: (a) currently licensed in the state in which the property is located, (b) is experienced in the appraisal of properties similar to the property being appraised, (c) is actively engaged in the appraisal work, (d) has knowledge of current real estate market conditions and financing trends, (e) is reputable, and (f) is not on Freddie Mac's nor the Bank's Exclusionary List of appraisers and brokers. In certain cases appraisals will be reviewed by our Real Estate Valuation Services group to ensure the quality of the appraisal and the expertise and independence of the appraiser. Upon receipt and review, an external appraisal is utilized to measure a loan for potential impairment. Our impairment analysis documents the date of the appraisal used in the analysis, whether the officer preparing the report deems it current, and, if not, allows for internal valuation adjustments with justification. Typical justified adjustments might include discounts for continued market deterioration subsequent to appraisal date, adjustments for the release of collateral contemplated in the appraisal, or the value of other collateral or consideration not contemplated in the appraisal. An appraisal over one year old in most cases will be considered stale dated and an updated or new appraisal will be required. Any adjustments from appraised value to net realizable value are detailed and justified in the impairment analysis, which is reviewed and approved by senior credit quality officers and the Company's Allowance for Loan and Lease Losses ("ALLL") Committee. Although an external appraisal is the primary source to value collateral dependent loans, we may also utilize values obtained through purchase and sale agreements, negotiated short sales, broker price opinions, or the sales price of the note. These alternative sources of value are used only if deemed to be more representative of value based on updated information regarding collateral resolution. Impairment analyses are updated, reviewed and approved on a quarterly basis at or near the end of each reporting period. Based on these processes, we do not believe there are significant time lapses for the recognition of additional loan loss provisions or charge-offs from the date they become known.

Loans are classified as non-accrual when collection of principal or interest is doubtful—generally if they are past due as to maturity or payment of principal or interest by 90 days or more—unless such loans are well-secured and in the process of collection. Additionally, all loans that are impaired are considered for non-accrual status. Loans placed on non-accrual will typically remain on non-accrual status until all principal and interest payments are brought current and the prospects for future payments in accordance with the loan agreement appear relatively certain.

Loans are reported as restructured when the Bank grants a concession(s) to a borrower experiencing financial difficulties that it would not otherwise consider. Examples of such concessions include a reduction in the loan rate, forgiveness of principal or accrued interest, extending the maturity date(s) or providing a lower interest rate than would be normally available for a transaction of similar risk. As a result of these concessions, restructured loans are impaired as the Bank will not collect all amounts due, both principal and interest, in accordance with the terms of the original loan agreement. Impairment reserves on non-collateral dependent restructured loans are measured by comparing the present value of expected future cash flows on the restructured loans discounted at the interest rate of the original loan agreement to the loan's carrying value. These impairment reserves are recognized as a specific component to be provided for in the allowance for loan and lease losses.

Loans are reported as past due when installment payments, interest payments, or maturity payments are past due based on contractual terms. All loans determined to be impaired are individually assessed for impairment except for impaired consumer loans which are collectively evaluated for impairment in accordance with ASC 450, Contingencies. The specific factors considered in determining that a loan is impaired include borrower financial capacity, current economic, business and market conditions, collection efforts, collateral position and other factors deemed relevant. Generally, impaired loans are placed on non-accrual status and all cash receipts are applied to the principal balance. Continuation of accrual status and recognition of interest income is generally limited to performing restructured loans.

The Company has written down impaired, non-accrual loans as of June 30, 2011 to their estimated net realizable value, generally based on disposition value, and expects resolution with no additional material loss, absent further decline in market prices.

Non-Covered Non-Accrual Loans and Loans Past Due

The following table summarizes our non-covered non-accrual loans and loans past due by loan class as of June 30, 2011 and December 31, 2010:

(in thousands)

	June 30, 2011
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Total Past Due		Nonaccrual		Current		Total Non-covered Loans and Leases
Commercial real estate
Term & multifamily	$	15,154	$	16,940	$	555	$	32,649	$	53,059	$	3,446,426	$	3,532,134
Construction & development		99		-		-		99		8,093		176,515		184,707
Residential development		2,573		-		-		2,573		25,858		84,226		112,657
Commercial
Term		1,548		957		750		3,255		8,070		561,077		572,402
LOC & other		476		495		5,713		6,684		14,809		766,775		788,268
Residential
Mortgage		1,357		908		4,467		6,732		-		238,302		245,034
Home equity loans & lines		1,800		1,277		1,123		4,200		-		273,253		277,453
Consumer & other		207		60		529		796		-		33,788		34,584
Total	$	23,214	$	20,637	$	13,137	$	56,988	$	109,889	$	5,580,362	$	5,747,239
Deferred loan fees, net														(11,686	)
Total													$	5,735,553

	December 31, 2010
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Total Past Due		Nonaccrual		Current		Total Non-covered Loans and Leases
Commercial real estate
Term & multifamily	$	14,596	$	8,328	$	3,008	$	25,932	$	49,162	$	3,408,381	$	3,483,475
Construction & development		2,172		6,726		-		8,898		20,124		218,792		247,814
Residential development		640		-		-		640		34,586		112,587		147,813
Commercial
Term		2,010		932		-		2,942		6,271		500,240		509,453
LOC & other		5,939		1,418		18		7,375		28,034		712,010		747,419
Residential
Mortgage		1,314		1,101		3,372		5,787		-		216,629		222,416
Home equity loans & lines		1,096		1,351		232		2,679		-		275,906		278,585
Consumer & other		361		233		441		1,035		-		32,008		33,043
Total	$	28,128	$	20,089	$	7,071	$	55,288	$	138,177	$	5,476,553	$	5,670,018
Deferred loan fees, net														(11,031	)
Total													$	5,658,987

Non-Covered Impaired Loans

The following table summarizes our impaired non-covered loans by loan class as of June 30, 2011 and December 31, 2010:

(in thousands)

	June 30, 2011
	Unpaid Principal Balance		Recorded Investment		Related Allowance
With no related allowance recorded:
Commercial real estate
Term & multifamily	$	65,617	$	53,059	$	-
Construction & development		33,793		22,446		-
Residential development		50,608		35,396		-
Commercial
Term		10,498		8,923		-
LOC & other		46,650		15,087		-
Residential
Mortgage		-		-		-
Home equity loans & lines		-		-		-
Consumer & other		-		-		-
With an allowance recorded:
Commercial real estate
Term & multifamily		12,705		12,705		396
Construction & development		13,363		12,343		122
Residential development		30,515		30,515		2,187
Commercial
Term		198		198		7
LOC & other		5,713		5,713		2,931
Residential
Mortgage		178		178		18
Home equity loans & lines		-		-		-
Consumer & other		-		-		-
Total:
Commercial real estate		206,601		166,464		2,705
Commercial		63,059		29,921		2,938
Residential		178		178		18
Consumer & other		-		-		-
Total	$	269,838	$	196,563	$	5,661

	December 31, 2010
	Unpaid Principal Balance		Recorded Investment		Related Allowance
With no related allowance recorded:
Commercial real estate
Term & multifamily	$	62,605	$	49,790	$	-
Construction & development		33,091		25,558		-
Residential development		63,859		39,011		-
Commercial
Term		8,024		6,969		-
LOC & other		56,046		19,814		-
Residential
Mortgage		-		-		-
Home equity loans & lines		-		-		-
Consumer & other		-		-		-
With an allowance recorded:
Commercial real estate
Term & multifamily		29,926		28,070		1,614
Construction & development		-		-		-
Residential development		46,059		44,504		906
Commercial
Term		205		205		9
LOC & other		9,878		8,519		2,702
Residential
Mortgage		179		179		8
Home equity loans & lines		-		-		-
Consumer & other		-		-		-
Total:
Commercial real estate		235,540		186,933		2,520
Commercial		74,153		35,507		2,711
Residential		179		179		8
Consumer & other		-		-		-
Total	$	309,872	$	222,619	$	5,239

Loans with no related allowance reported generally represent non-accrual loans. The Company recognizes the charge-off of impairment reserves on impaired loans in the period it arises for collateral dependent loans. Therefore, the non-accrual loans as of June 30, 2011 have already been written-down to their estimated net realizable value, based on disposition value, and are expected to be resolved with no additional material loss, absent further decline in market prices. The valuation allowance on impaired loans primarily represents the impairment reserves on performing restructured loans, and is measured by comparing the present value of expected future cash flows on the restructured loans discounted at the interest rate of the original loan agreement to the loan's carrying value.

At June 30, 2011 and December 31, 2010, impaired loans of $81.0 million and $84.4 million were classified as accruing restructured loans, respectively. The restructurings were granted in response to borrower financial difficulty, and generally provide for a temporary modification of loan repayment terms. The restructured loans on accrual status and one loan included in loans past due 90+ days and accruing represent the only impaired loans accruing interest at June 30, 2011. The restructured loans on accrual status represent the only impaired loans accruing interest at December 31, 2010. In order for a restructured loan to be considered for accrual status, the loan's collateral coverage generally will be greater than or equal to 100% of the loan balance, the loan is current on payments, and the borrower must either prefund an interest reserve or demonstrate the ability to make payments from a verified source of cash flow. The Company had no obligations to lend additional funds on the restructured loans as of June 30, 2011.

The following table summarizes our average recorded investment and interest income recognized on impaired non-covered loans by loan class for the three months and six months ended June 30, 2011 and 2010:

(in thousands)

	For the three months ended June 30, 2011				For the three months ended June 30, 2010
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate
Term & multifamily	$	54,086	$	-	$	57,851	$	-
Construction & development		21,063		-		24,668		-
Residential development		37,841		-		31,695		-
Commercial
Term		8,307		-		10,768		-
LOC & other		17,978		-		42,009		-
Residential
Mortgage		-		-		-		-
Home equity loans & lines		-		-		-		-
Consumer & other		-		-		-		-
With an allowance recorded:
Commercial real estate
Term & multifamily		15,733		233		29,731		220
Construction & development		8,905		266		4,264		-
Residential development		32,943		320		60,605		506
Commercial
Term		202		11		225		12
LOC & other		2,857		-		-		4
Residential
Mortgage		178		1		4,474		62
Home equity loans & lines		-		-		35		-
Consumer & other		-		-		-		-
Total:
Commercial real estate		170,571		819		208,814		726
Commercial		29,344		11		53,002		16
Residential		178		1		4,509		62
Consumer & other		-		-		-		-
Total	$	200,093	$	831	$	266,325	$	804
	For the six months ended June 30, 2011				For the six months ended June 30, 2010
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate
Term & multifamily	$	54,725	$	-	$	60,241	$	-
Construction & development		23,238		-		28,665		-
Residential development		37,762		-		39,438		-
Commercial
Term		8,678		-		10,673		-
LOC & other		24,724		-		46,905		-
Residential
Mortgage		-		-		-		-
Home equity loans & lines		-		-		-		-
Consumer & other		-		-		-		-
With an allowance recorded:
Commercial real estate
Term & multifamily		19,995		424		32,856		451
Construction & development		6,506		338		2,843		-
Residential development		40,165		670		60,053		937
Commercial
Term		268		23		296		24
LOC & other		2,532		-		200		8
Residential
Mortgage		1,369		3		4,705		121
Home equity loans & lines		7		-		23		1
Consumer & other		-		-		-		-
Total:
Commercial real estate		182,391		1,432		224,096		1,388
Commercial		36,202		23		58,074		32
Residential		1,376		3		4,728		122
Consumer & other		-		-		-		-
Total	$	219,969	$	1,458	$	286,898	$	1,542

The impaired loans for which these interest income amounts were recognized primarily relate to accruing restructured loans.

Non-covered Credit Quality Indicators

As previously noted, the Company's risk rating methodology assigns risk ratings ranging from 1 to 10, where a higher rating represents higher risk. The Bank differentiates its lending portfolios into homogeneous loans (generally consumer loans) and non-homogeneous loans (generally all non-consumer loans). The 10 risk rating categories can be generally described by the following groupings for non-homogeneous loans:

Minimal Risk – A minimal risk loan, risk rated 1, is to a borrower of the highest quality. The borrower has an unquestioned ability to produce consistent profits and service all obligations and can absorb severe market disturbances with little or no difficulty.

Low Risk – A low risk loan, risk rated 2, is similar in characteristics to a minimal risk loan. Margins may be smaller or protective elements may be subject to greater fluctuation. The borrower will have a strong demonstrated ability to produce profits, provide ample debt service coverage and to absorb market disturbances.

Modest Risk – A modest risk loan, risk rated 3, is a desirable loan with excellent sources of repayment and no currently identifiable risk of collection. The borrower exhibits a very strong capacity to repay the credit in accordance with the repayment agreement. The borrower may be susceptible to economic cycles, but will have reserves to weather these cycles.

Average Risk – An average risk loan, risk rated 4, is an attractive loan with sound sources of repayment and no material collection or repayment weakness evident. The borrower has an acceptable capacity to pay in accordance with the agreement. The borrower is susceptible to economic cycles and more efficient competition, but should have modest reserves sufficient to survive all but the most severe downturns or major setbacks.

Acceptable Risk – An acceptable risk loan, risk rated 5, is a loan with lower than average, but still acceptable credit risk. These borrowers may have higher leverage, less certain but viable repayment sources, have limited financial reserves and may possess weaknesses that can be adequately mitigated through collateral, structural or credit enhancement. The borrower is susceptible to economic cycles and is less resilient to negative market forces or financial events. Reserves may be insufficient to survive a modest downturn.

Watch – A watch loan, risk rated 6, is still pass-rated, but represents the lowest level of acceptable risk due to an emerging risk element or declining performance trend. Watch ratings are expected to be temporary, with issues resolved or manifested to the extent that a higher or lower rating would be appropriate. The borrower should have a plausible plan, with reasonable certainty of success, to correct the problems in a short period of time. Borrowers rated Watch are characterized by elements of uncertainty, such as:

• Borrower may be experiencing declining operating trends, strained cash flows or less-than anticipated performance. Cash flow should still be adequate to cover debt service, and the negative trends should be identified as being of a short-term or temporary nature.

• The borrower may have experienced a minor, unexpected covenant violation.

• Companies who may be experiencing tight working capital or have a cash cushion deficiency.

• Loans may also be a Watch if financial information is late, there is a documentation deficiency, the borrower has experienced unexpected management turnover, or if they face industry issues that, when combined with performance factors create uncertainty in their future ability to perform.

• Delinquent payments, increasing and material overdraft activity, request for bulge and/or out-of-formula advances may be an indicator of inadequate working capital and may suggest a lower rating.

• Failure of the intended repayment source to materialize as expected, or renewal of a loan (other than cash/marketable security secured or lines of credit) without reduction are possible indicators of a Watch or worse risk rating.

Special Mention – A Special Mention loan, risk rated 7, has potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or the institutions credit position at some future date. They contain unfavorable characteristics and are generally undesirable. Loans in this category are currently protected but are potentially weak and constitute an undue and unwarranted credit risk, but not to the point of a Substandard classification. A Special Mention loan has potential weaknesses, which if not checked or corrected, weaken the asset or inadequately protect the Bank's position at some future date. Such weaknesses include:

• Performance is poor or significantly less than expected. There may be a temporary debt-servicing deficiency or inadequate working capital as evidenced by a cash cushion deficiency, but not to the extent that repayment is compromised. Material violation of financial covenants is common.

• Loans with unresolved material issues that significantly cloud the debt service outlook, even though a debt servicing deficiency does not currently exist.

• Modest underperformance or deviation from plan for real estate loans where absorption of rental/sales units is necessary to properly service the debt as structured. Depth of support for interest carry provided by owner/guarantors may mitigate and provide for improved rating.

• This rating may be assigned when a loan officer is unable to supervise the credit properly due to inadequate expertise, an inadequate loan agreement, an inability to control collateral, failure to obtain proper documentation, or any other deviation from prudent lending practices.

• Unlike a Substandard credit, there should be a reasonable expectation that these temporary issues will be corrected within the normal course of business, rather than liquidation of assets, and in a reasonable period of time.

Substandard – A substandard asset, risk rated 8, is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified substandard. Loans are classified as Substandard when they have unsatisfactory characteristics causing unacceptable levels of risk. A substandard loan normally has one or more well-defined weaknesses that could jeopardize repayment of the debt. The likely need to liquidate assets to correct the problem, rather than repayment from successful operations is the key distinction between Special Mention and Substandard. The following are examples of well-defined weaknesses:

• Cash flow deficiencies or trends are of a magnitude to jeopardize current and future payments with no immediate relief. A loss is not presently expected, however the outlook is sufficiently uncertain to preclude ruling out the possibility.

• Borrower has been unable to adjust to prolonged and unfavorable industry or economic trends.

• Material underperformance or deviation from plan for real estate loans where absorption of rental/sales units is necessary to properly service the debt and risk is not mitigated by willingness and capacity of owner/guarantor to support interest payments.

• Management character or honesty has become suspect. This includes instances where the borrower has become uncooperative.

• Due to unprofitable or unsuccessful business operations, some form of restructuring of the business, including liquidation of assets, has become the primary source of loan repayment. Cash flow has deteriorated, or been diverted, to the point that sale of collateral is now the Bank's primary source of repayment (unless this was the original source of repayment). If the collateral is under the Bank's control and is cash or other liquid, highly marketable securities and properly margined, then a more appropriate rating might be Special Mention or Watch.

• The borrower is bankrupt, or for any other reason, future repayment is dependent on court action.

• There is material, uncorrectable faulty documentation or materially suspect financial information.

Doubtful/Loss – Loans classified as doubtful, risk rated 9 to 10, have all the weaknesses inherent in one classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonably specific pending factors, which may work towards strengthening of the asset, classification as a loss (and immediate charge-off) is deferred until more exact status may be determined. Pending factors include proposed merger, acquisition, liquidation procedures, capital injection, and perfection of liens on additional collateral and refinancing plans. In certain circumstances, a Doubtful rating will be temporary, while the Bank is awaiting an updated collateral valuation. In these cases, once the collateral is valued and appropriate margin applied, the remaining un-collateralized portion will be charged off. The remaining balance, properly margined, may then be upgraded to Substandard, however must remain on non-accrual. A loss rating is assigned to loans considered un-collectible and of such little value that the continuance as an active Bank asset is not warranted. This rating does not mean that the loan has no recovery or salvage value, but rather that the loan should be charged off now, even though partial or full recovery may be possible in the future.

Impaired – Loans are classified as impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal and interest when due, in accordance with the terms of the original loan agreement, without unreasonable delay. This generally includes all loans classified as non-accrual and troubled debt restructurings.

The following table summarizes our internal risk rating by loan class as of June 30, 2011 and December 31, 2010:

(in thousands)

(in thousands)

	June 30, 2011
	Pass/ Watch		Special Mention		Substandard		Doubtful/Loss		Impaired		Total
Commercial real estate
Term & multifamily	$	3,004,552	$	317,006	$	144,812	$	-	$	65,764	$	3,532,134
Construction & development		111,702		18,625		19,591		-		34,789		184,707
Residential development		24,704		10,021		12,021		-		65,911		112,657
Commercial
Term		509,666		29,983		23,632		-		9,121		572,402
LOC & other		690,219		41,091		36,158		-		20,800		788,268
Residential
Mortgage		238,198		2,369		2,003		2,286		178		245,034
Home equity loans & lines		273,916		2,414		556		567		-		277,453
Consumer & other		33,789		267		36		492		-		34,584
Total	$	4,886,746	$	421,776	$	238,809	$	3,345	$	196,563	$	5,747,239
Deferred loan fees, net												(11,686	)
Total											$	5,735,553
	December 31, 2010
	Pass/ Watch		Special Mention		Substandard		Doubtful/Loss		Impaired		Total
Commercial real estate
Term & multifamily	$	2,978,116	$	314,094	$	113,405	$	-	$	77,860	$	3,483,475
Construction & development		145,108		25,295		51,853		-		25,558		247,814
Residential development		27,428		13,764		23,106		-		83,515		147,813
Commercial
Term		472,512		17,658		12,109		-		7,174		509,453
LOC & other		646,163		30,761		42,162		-		28,333		747,419
Residential
Mortgage		216,899		2,414		786		2,138		179		222,416
Home equity loans & lines		275,906		2,447		125		107		-		278,585
Consumer & other		32,008		595		29		411		-		33,043
Total	$	4,794,140	$	407,028	$	243,575	$	2,656	$	222,619	$	5,670,018
Deferred loan fees, net												(11,031	)
Total											$	5,658,987

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2011

Commitments and Contingencies

Commitments and Contingencies

Note 10 – Commitments and Contingencies

Lease Commitments — The Company leases 136 sites under non-cancelable operating leases. The leases contain various provisions for increases in rental rates, based either on changes in the published Consumer Price Index or a predetermined escalation schedule. Substantially all of the leases provide the Company with the option to extend the lease term one or more times following expiration of the initial term. In addition, in connection with the Nevada Security acquisition, the Company had the option to purchase one of the leased facilities, which was purchased in the second quarter of 2011.

Rent expense for the three and six months ended June 30, 2011 was $4.0 million and $8.2 million, respectively, compared to $3.8 million and $7.3 million, respectively, in the comparable periods in 2010. Rent expense was offset by rent income for the three and six months ended June 30, 2011 of $200,000 and $472,000, respectively, compared to $327,000 and $475,000, respectively, in the comparable periods in 2010.

Financial Instruments with Off-Balance-Sheet Risk — The Company's financial statements do not reflect various commitments and contingent liabilities that arise in the normal course of the Bank's business and involve elements of credit, liquidity, and interest rate risk.

The following table presents a summary of the Bank's commitments and contingent liabilities:

(in thousands)

	As of June 30, 2011
Commitments to extend credit	$	1,199,041
Commitments to extend overdrafts	$	239,788
Forward sales commitments	$	106,000
Standby letters of credit	$	59,501
Commitments to originate loans held for sale	$	67,591

The Bank is a party to financial instruments with off-balance-sheet credit risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees. Those instruments involve elements of credit and interest-rate risk similar to the amounts recognized in the Condensed Consolidated Balance Sheets. The contract or notional amounts of those instruments reflect the extent of the Bank's involvement in particular classes of financial instruments.

The Bank's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit, and financial guarantees written, is represented by the contractual notional amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any covenant or condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. While most standby letters of credit are not utilized, a significant portion of such utilization is on an immediate payment basis. The Bank evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation of the counterparty. Collateral varies but may include cash, accounts receivable, inventory, premises and equipment and income-producing commercial properties.

Standby letters of credit and financial guarantees written are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements, including international trade finance, commercial paper, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank holds cash, marketable securities, or real estate as collateral supporting those commitments for which collateral is deemed necessary. The Bank has not been required to perform on any financial guarantees and did not incur any losses in connection with standby letters of credit during the three and six months ended June 30, 2011 and 2010. At June 30, 2011, approximately $32.3 million of standby letters of credit expire within one year, and $27.2 million expire thereafter. Upon issuance, the Company recognizes a liability equivalent to the amount of fees received from the customer for these standby letter of credit commitments. Fees are recognized ratably over the term of the standby letter of credit. The estimated fair value of guarantees associated with standby letters of credit was $256,000 as of June 30, 2011.

At June 30, 2011 and December 31, 2010, the reserve for unfunded commitments, which is included in other liabilities on the Condensed Consolidated Balance Sheets, was $988,000 and $818,000, respectively. The adequacy of the reserve for unfunded commitments is reviewed on a quarterly basis, based upon changes in the amount of commitments, loss experience, and economic conditions.

Mortgage loans sold to investors may be sold with servicing rights retained, for which it makes only standard legal representations and warranties as to meeting certain underwriting and collateral documentation standards. In the past two years, the Bank has had to repurchase fewer than 10 loans due to deficiencies in underwriting or loan documentation and has not realized significant losses related to these repurchases. Management believes that any liabilities that may result from such recourse provisions are not significant.

Legal Proceedings - The Bank owns 468,659 shares of Class B common stock of Visa Inc. which are convertible into Class A common stock at a conversion ratio of 0.4881 per Class A share. As of June 30, 2011, the value of the Class A shares was $84.26 per share. Utilizing the conversion ratio, the value of unredeemed Class A equivalent shares owned by the Company was $19.3 million as of June 30, 2011, and has not been reflected in the accompanying financial statements. The shares of Visa Class B common stock are restricted and may not be transferred. Visa Member Banks are required to fund an escrow account to cover settlements, resolution of pending litigation and related claims. If the funds in the escrow account are insufficient to settle all the covered litigation, Visa may sell additional Class A shares, use the proceeds to settle litigation, and further reduce the conversion ratio. If funds remain in the escrow account after all litigation is settled, the Class B conversion ratio will be increased to reflect that surplus.

In the ordinary course of business, various claims and lawsuits are brought by and against the Company, the Bank and Umpqua Investments. In the opinion of management, there is no pending or threatened proceeding in which an adverse decision could result in a material adverse change in the Company's consolidated financial condition or results of operations.

Concentrations of Credit Risk - The Company grants real estate mortgage, real estate construction, commercial, agricultural and installment loans and leases to customers throughout Oregon, Washington, California, and Nevada. In management's judgment, a concentration exists in real estate-related loans, which represented approximately 80% of the Company's non-covered loan and lease portfolio at June 30, 2011, and 82% at December 31, 2010. Commercial real estate concentrations are managed to assure wide geographic and business diversity. Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general, material increases in interest rates, changes in tax policies, tightening credit or refinancing markets, or a decline in real estate values in the Company's primary market areas in particular, such as was seen with the deterioration in the residential development market since 2007, could have an adverse impact on the repayment of these loans. Personal and business incomes, proceeds from the sale of real property, or proceeds from refinancing, represent the primary sources of repayment for a majority of these loans.

The Bank recognizes the credit risks inherent in dealing with other depository institutions. Accordingly, to prevent excessive exposure to any single correspondent, the Bank has established general standards for selecting correspondent banks as well as internal limits for allowable exposure to any single correspondent. In addition, the Bank has an investment policy that sets forth limitations that apply to all investments with respect to credit rating and concentrations with an issuer.

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Mortgage Servicing Rights (Schedule of Changes in Mortgage Servicing Rights) (Details) (USD $)	3 Months Ended				6 Months Ended
	Jun. 30, 2011		Jun. 30, 2010		Jun. 30, 2011		Jun. 30, 2010
Mortgage Servicing Rights
Balance, beginning of period	$ 15,605,000.000		$ 13,628,000.000		$ 14,454,000.000		$ 12,625,000.000
Additions for new mortgage servicing rights capitalized	1,073,000.000		938,000.000		2,407,000.000		2,008,000.000
Acquired mortgage servicing rights							62,000.000
Changes in fair value, Due to changes in model inputs or assumptions	(103,000.000)	[1]	284,000.000	[1]	25,000.000	[1]	129,000.000	[1]
Changes in fair value, Due to changes in model inputs or assumptions	(225,000.000)	[2]	(1,955,000.000)	[2]	(536,000.000)	[2]	(1,929,000.000)	[2]
Balance, end of period	$ 16,350,000.000		$ 12,895,000.000		$ 16,350,000.000		$ 12,895,000.000

[1] Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.

[2] Represents changes due to collection/realization of expected cash flows over time.

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Covered Assets and FDIC Indemnification Asset

6 Months Ended

Jun. 30, 2011

Covered Assets and FDIC Indemnification Asset

Covered Assets and FDIC Indemnification Asset

Note 6 – Covered Assets and FDIC Indemnification Asset

Covered Loans

Loans acquired in a FDIC-assisted acquisition that are subject to a loss-share agreement are referred to as "covered loans" and reported separately in our statements of financial condition. Covered loans are reported exclusive of the expected cash flow reimbursements expected from the FDIC.

Acquired loans are valued as of acquisition date in accordance with Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") 805, Business Combinations. Loans purchased with evidence of credit deterioration since origination for which it is probable that all contractually required payments will not be collected are accounted for under FASB ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality. Because of the significant fair value discounts associated with the acquired portfolios, the concentration of real estate related loans (to finance or secured by real estate collateral) and the decline in real estate values in the regions serviced, and after considering the underwriting standards of the acquired originating bank, the Company elected to account for all acquired loans under ASC 310-30. Under FASB ASC 805 and ASC 310-30, loans are to be recorded at fair value at acquisition date, factoring in credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for loan losses is not carried over or recorded as of the acquisition date. We have aggregated the acquired loans into various loan pools based on multiple layers of common risk characteristics for the purpose of determining their respective fair values as of their acquisition dates, and for applying the subsequent recognition and measurement provisions for income accretion and impairment testing.

Acquired loans were first segregated between those designated as performing versus those designated as non-performing. In this application, 'performing' and 'non-performing' loans were defined in accordance with the scoping requirements of ASC 310-30, that is the 'non-performing' loans individually exhibited evidence of deteriorated credit quality since origination for which it is probable that we will not be able to collect all contractually required payments receivable. Our Credit Quality and Credit Review teams identified these non-performing credits on a loan-by-loan basis during the due diligence process. Generally, identified non-performing loans tended to be risk rated substandard or worse on the acquired institution's books. Collectively, the non-performing loans would be considered the 'classic' application of ASC 310-30. The remaining performing notes were accounted for under ASC 310-30 by analogy due to the significant fair value discounts associated with the pools resulting from the underwriting standards of the acquired bank (that often contributed to the bank's failure), the concentration of loans for the purpose of, and collateralized by, real estate, and the general economic condition of the regions each acquired bank serviced. We deem analogizing all loans to ASC 310-30 acceptable as a significant component of the fair value discount applied to each loan pool is attributed to estimated credit losses that are anticipated to occur over the life of each respective loan pool.

Once notes were separated based on their expected future performance, they were further segregated based on specific loan types (purpose/collateral) and then their principal cash flow and interest rate characteristics. The most significant loan type categories utilized (in no particular order) were commercial residential development, commercial construction, farmland, 1^st lien single family mortgages, 2^nd lien single family loans, single family revolving lines of credit, multifamily mortgages, owner occupied commercial real estate, non-owner occupied commercial real estate, commercial loans, commercial lines of credit, consumer installment loans, and consumer lines of credit. Next, groups of loans were segregated based on repayment characteristics, specifically whether the notes' principal balances were amortizing or interest-only. Lastly, loans were separated by various interest rate characteristics, such as whether the interest rate was fixed or variable. For those loans whose interest rates were variable, they were also segregated by their underlying indices (e.g. PRIME, Federal Home Loan Bank, or constant maturity treasury) and whether or not there were interest rate floors.

The following table presents the number of pools, number of loans and acquired unpaid principal balance, by performing ("analogized 310-30"), non-performing ("classic 310-30") and in total, separately for each institution acquired in 2010.

(dollars in millions)

	Evergreen		Rainier Pacific		Nevada Security
Performing loans ("Analogized ASC 310-30"):
Number of Pools		15		19		19
Number of Loans		1,263		3,647		402
Acquired Unpaid Principal Balance	$	247.9	$	516.9	$	224.2
Non-performing loans ("Classic ASC 310-30"):
Number of Pools		8		10		9
Number of Loans		127		39		106
Acquired Unpaid Principal Balance	$	120.6	$	44.5	$	103.4
Total Portfolio:
Number of Pools		23		29		28
Number of Loans		1,390		3,686		508
Acquired Unpaid Principal Balance	$	368.5	$	561.4	$	327.6

The fair value of each loan pool was computed by discounting the expected cash flows at their estimated market discount rate. Cash flows expected to be collected at acquisition date were estimated by applying certain key assumptions to each loan pool, such as credit loss rates, prepayment speeds, and resolution terms related to non-performing loans, against the contractual cash flows of the underlying loans. Credit loss estimates for each pool were determined by considering factors such as, underlying collateral types, collateral locations, estimated collateral values, and credit quality indicators such as risk ratings. Market discount rates were determined using a buildup approach which included assumptions with respect to funding cost and funding mix, a market participant's required rate of return on equity capital, servicing costs and a liquidity premium.

The following table reflects the estimated fair value of the acquired loans at the acquisition dates:

	Evergreen		Rainier		Nevada Security		Total
	January 22, 2010		February 26, 2010		June 18, 2010
Commercial real estate
Term & multifamily	$	141,076	$	331,869	$	154,119	$	627,064
Construction & development		18,832		562		9,481		28,875
Residential development		16,219		10,340		15,641		42,200
Commercial
Term		27,272		14,850		18,257		60,379
LOC & other		23,965		18,169		11,408		53,542
Residential
Mortgage		11,886		39,897		1,539		53,322
Home equity loans & lines		8,308		31,029		4,421		43,758
Consumer & other		4,935		11,624		641		17,200
Total	$	252,493	$	458,340	$	215,507	$	926,340

In estimating the fair value of the covered loans at the acquisition date, we (a) calculated the contractual amount and timing of undiscounted principal and interest payments and (b) estimated the amount and timing of undiscounted expected principal and interest payments. The difference between these two amounts represents the nonaccretable difference. On the acquisition date, the amount by which the undiscounted expected cash flows exceed the estimated fair value of the acquired loans is the "accretable yield". The accretable yield is then measured at each financial reporting date and represents the difference between the remaining undiscounted expected cash flows and the current carrying value of the loans.

The following table presents a reconciliation of the undiscounted contractual cash flows, nonaccretable difference, accretable yield, and fair value of covered loans for each respective acquired loan portfolio at the acquisition dates:

(in thousands)

	Evergreen			Rainier			Nevada Security			Total
	January 22, 2010			February 26, 2010			June 18, 2010
Undiscounted contractual cash flows	$	498,216		$	821,972		$	396,134		$	1,716,322
Undiscounted cash flows not expected to be collected (nonaccretable difference)		(124,131	)		(125,774	)		(115,021	)		(364,926	)
Undiscounted cash flows expected to be collected		374,085			696,198			281,113			1,351,396
Accretable yield at acquisition		(121,592	)		(237,858	)		(65,606	)		(425,056	)
Estimated fair value of loans acquired at acquisition	$	252,493		$	458,340		$	215,507		$	926,340

The covered loan portfolio also includes revolving lines of credit with funded and unfunded commitments. Funds advanced at the time of acquisition are included in the loan pools and are accounted for under ASC 310-30. Any additional advances on these loans subsequent to the acquisition date may or may not be covered depending on the nature of the disbursement and the terms of each respective loss-sharing agreement, and are not accounted for under ASC 310-30.

The covered loans acquired are and will continue to be subject to the Company's internal and external credit review and monitoring. To the extent there is experienced or projected credit deterioration on the acquired loan pools subsequent to amounts estimated at the previous remeasurement date, this deterioration will be measured, and a provision for credit losses will be charged to earnings. Additionally, provision for credit losses will be recorded on advances on covered loans subsequent to acquisition date in a manner consistent with the allowance for non-covered loan and lease losses. These provisions will be mostly offset by an increase to the FDIC indemnification asset, which is recognized in non-interest income.

Covered Loans

The following table presents the major types of covered loans as of June 30, 2011 and December 31, 2010:

(in thousands)

	June 30, 2011
	Evergreen		Rainier		Nevada Security		Total
Commercial real estate
Term & multifamily	$	107,772	$	276,358	$	131,819	$	515,949
Construction & development		12,398		690		6,730		19,818
Residential development		7,055		171		8,721		15,947
Commercial
Term		15,406		8,913		12,932		37,251
LOC & other		9,655		12,623		6,202		28,480
Residential
Mortgage		8,079		31,120		1,869		41,068
Home equity loans & lines		5,278		22,925		3,251		31,454
Consumer & other		2,293		6,416		-		8,709
Total	$	167,936	$	359,216	$	171,524	$	698,676

	December 31, 2010
	Evergreen		Rainier		Nevada Security		Total
Commercial real estate
Term & multifamily	$	124,743	$	303,585	$	141,314	$	569,642
Construction & development		14,162		854		7,419		22,435
Residential development		11,024		2,310		11,372		24,706
Commercial
Term		18,828		10,811		12,961		42,600
LOC & other		11,876		14,320		9,031		35,227
Residential
Mortgage		8,129		35,026		1,669		44,824
Home equity loans & lines		6,737		25,163		3,725		35,625
Consumer & other		2,781		8,058		-		10,839
Total	$	198,280	$	400,127	$	187,491	$	785,898

The outstanding contractual unpaid principal balance, excluding purchase accounting adjustments, at June 30, 2011 was $242.1 million, $447.5 million and $283.2 million, for Evergreen, Rainier, and Nevada Security, respectively, as compared to $286.6 million, $481.7 million and $295.4 million, for Evergreen, Rainier, and Nevada Security, respectively, at December 31, 2010.

In estimating the fair value of the covered loans at the acquisition date, we (a) calculated the contractual amount and timing of undiscounted principal and interest payments and (b) estimated the amount and timing of undiscounted expected principal and interest payments. The difference between these two amounts represents the nonaccretable difference.

On the acquisition date, the amount by which the undiscounted expected cash flows exceed the estimated fair value of the acquired loans is the "accretable yield". The accretable yield is then measured at each financial reporting date and represents the difference between the remaining undiscounted expected cash flows and the current carrying value of the loans.

The following table presents the changes in the accretable yield for the three and six months ended June 30, 2011 and 2010 for each respective acquired loan portfolio:

	Three months ended June 30,
	2011
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	75,081		$	155,285		$	69,301		$	299,667
Accretion to interest income		(7,904	)		(8,396	)		(5,926	)		(22,226	)
Disposals		(4,181	)		(2,803	)		(1,403	)		(8,387	)
Reclassifications (to)/from nonaccretable difference		4,473			(89	)		6,622			11,006
Balance, end of period	$	67,469		$	143,997		$	68,594		$	280,060
	Three months ended June 30,
	2010
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	118,119		$	233,678		$	-		$	351,797
Additions resulting from acquisitions		-			-			65,606			65,606
Accretion to interest income		(3,528	)		(8,575	)		(553	)		(12,656	)
Disposals		(2,234	)		(1,931	)		(90	)		(4,255	)
Reclassifications (to)/from nonaccretable difference		(28,422	)		(17,490	)		86			(45,826	)
Balance, end of period	$	83,935		$	205,682		$	65,049		$	354,666
	Six months ended June 30,
	2011
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	90,771		$	172,615		$	73,515		$	336,901
Accretion to interest income		(15,613	)		(17,111	)		(11,049	)		(43,773	)
Disposals		(6,973	)		(9,447	)		(2,807	)		(19,227	)
Reclassifications (to)/from nonaccretable difference		(716	)		(2,060	)		8,935			6,159
Balance, end of period	$	67,469		$	143,997		$	68,594		$	280,060
	Six months ended June 30,
	2010
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	-		$	-		$	-		$	-
Additions resulting from acquisitions		121,592			237,858			65,606			425,056
Accretion to interest income		(6,759	)		(11,599	)		(553	)		(18,911	)
Disposals		(2,825	)		(3,388	)		(90	)		(6,303	)
Reclassifications (to)/from nonaccretable difference		(28,073	)		(17,189	)		86			(45,176	)
Balance, end of period	$	83,935		$	205,682		$	65,049		$	354,666

Allowance for Covered Loan and Lease Losses

The following table summarizes activity related to the allowance for covered loan and lease losses by covered loan portfolio segment for the three and six months ended June 30, 2011, respectively:

(in thousands)

	Three Months Ended June 30, 2011
	Commercial Real Estate			Commercial			Residential			Consumer & Other			Total
Balance, beginning of period	$	5,068		$	1,800		$	962		$	413		$	8,243
Charge-offs		(742	)		(184	)		(194	)		(659	)		(1,779	)
Recoveries		-			-			-			-			-
Provision		1,388			1,016			425			926			3,755
Balance, end of period	$	5,714		$	2,632		$	1,193		$	680		$	10,219
	Six Months Ended June 30, 2011
	Commercial Real Estate			Commercial			Residential			Consumer & Other			Total
Balance, beginning of period	$	2,465		$	176		$	56		$	24		$	2,721
Charge-offs		(1,895	)		(244	)		(823	)		(563	)		(3,525	)
Recoveries		-			-			-			-			-
Provision		5,144			2,700			1,960			1,219			11,023
Balance, end of period	$	5,714		$	2,632		$	1,193		$	680		$	10,219

The following table presents the allowance and recorded investment in by covered loan portfolio segment as of June 30, 2011:

(in thousands)

	June 30, 2011
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Allowance for covered loans and leases:
Loans acquired with deteriorated credit quality (1)	$	5,303	$	2,019	$	1,163	$	657	$	9,142
Collectively evaluated for impairment (2)		411		613		30		23		1,077
Total	$	5,714	$	2,632	$	1,193	$	680	$	10,219
Covered loans and leases:
Loans acquired with deteriorated credit quality (1)	$	549,771	$	42,352	$	68,291	$	6,555	$	666,969
Collectively evaluated for impairment (2)	$	1,943	$	23,379	$	4,231	$	2,154		31,707
Total	$	551,714	$	65,731	$	72,522	$	8,709	$	698,676

(1) In accordance with ASC 310-30, the valuation allowance is netted against the carrying value of the covered loan and lease balance.

(2) The allowance on covered loan and lease losses includes an allowance on covered loan advances on acquired loans subsequent to acquisition.

The valuation allowance on covered loans was reduced by recaptured provision of $1.0 million and $1.1 million respectively, for the three and six months ended June 30, 2011.

There was no valuation allowance on covered loans and no allowance on covered loan advances on acquired loans subsequent to acquisition at June 30, 2010.

Covered Credit Quality Indicators

Covered loans risk rated in a manner consistent with non-covered loans. As previously noted, the Company's risk rating methodology assigns risk ratings ranging from 1 to 10, where a higher rating represents higher risk. The 10 risk rating groupings are described fully in Note 5. The below table includes both loans acquired with deteriorated credit quality accounted for under ASC 310-30 and covered loan advances on acquired loans subsequent to acquisition.

The following table summarizes our internal risk rating grouping by covered loans, net class as of June 30, 2011 and December 31, 2010:

(in thousands)

	June 30, 2011
	Pass/ Watch		Special Mention		Substandard		Doubtful/Loss		Total
Commercial real estate
Term & multifamily	$	419,493	$	38,176	$	47,689	$	10,591	$	515,949
Construction & development		3,060		2,919		8,489		5,350		19,818
Residential development		1,646		-		9,012		5,289		15,947
Commercial
Term		24,285		1,970		8,385		2,611		37,251
LOC & other		19,506		1,953		6,720		301		28,480
Residential
Mortgage		41,051		-		17		-		41,068
Home equity loans & lines		31,393		-		61		-		31,454
Consumer & other		8,709		-		-		-		8,709
Total	$	549,143	$	45,018	$	80,373	$	24,142	$	698,676
	December 31, 2010
	Pass/ Watch		Special Mention		Substandard		Doubtful/Loss		Total
Commercial real estate
Term & multifamily	$	485,238	$	32,150	$	44,833	$	7,421	$	569,642
Construction & development		6,155		3,799		7,640		4,841		22,435
Residential development		6,625		1,322		12,907		3,852		24,706
Commercial
Term		31,760		2,119		7,087		1,634		42,600
LOC & other		22,960		4,246		7,183		838		35,227
Residential
Mortgage		44,524		-		300		-		44,824
Home equity loans & lines		34,998		-		627		-		35,625
Consumer & other		10,827		-		12		-		10,839
Total	$	643,087	$	43,636	$	80,589	$	18,586	$	785,898

Covered Other Real Estate Owned

All OREO acquired in FDIC-assisted acquisitions that are subject to a FDIC loss-share agreement are referred to as "covered OREO" and reported separately in our statements of financial position. Covered OREO is reported exclusive of expected reimbursement cash flows from the FDIC. Foreclosed covered loan collateral is transferred into covered OREO at the collateral's net realizable value, less selling costs.

Covered OREO was initially recorded at its estimated fair value on the acquisition date based on similar market comparable valuations less estimated selling costs. Any subsequent valuation adjustments due to declines in fair value will be charged to non-interest expense, and will be mostly offset by non-interest income representing the corresponding increase to the FDIC indemnification asset for the offsetting loss reimbursement amount. Any recoveries of previous valuation adjustments will be credited to non-interest expense with a corresponding charge to non-interest income for the portion of the recovery that is due to the FDIC.

The following table summarizes the activity related to the covered OREO for the three and six months ended June 30, 2011 and 2010:

(in thousands)

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Balance, beginning of period	$	27,689		$	8,995		$	29,863		$	-
Acquisition		-			17,938			-			26,939
Additions to covered OREO		5,632			2,560			8,668			2,669
Dispositions of covered OREO		(2,503	)		(1,198	)		(6,457	)		(1,313	)
Valuation adjustments in the period		(665	)		(5	)		(1,921	)		(5	)
Balance, end of period	$	30,153		$	28,290		$	30,153		$	28,290

FDIC Indemnification Asset

The Company has elected to account for amounts receivable under the loss-share agreement as an indemnification asset in accordance with FASB ASC 805, Business Combinations. The FDIC indemnification asset is initially recorded at fair value, based on the discounted value of expected future cash flows under the loss-share agreement. The difference between the present value and the undiscounted cash flows the Company expects to collect from the FDIC will be accreted into non-interest income over the life of the FDIC indemnification asset.

Subsequent to initial recognition, the FDIC indemnification asset is reviewed quarterly and adjusted for any changes in expected cash flows based on recent performance and expectations for future performance of the covered assets. These adjustments are measured on the same basis as the related covered loans and covered other real estate owned. Any increases in cash flow of the covered assets over those expected will reduce the FDIC indemnification asset and any decreases in cash flow of the covered assets under those expected will increase the FDIC indemnification asset. Increases and decreases to the FDIC indemnification asset are recorded as adjustments to non-interest income. The resulting carrying value of the indemnification asset represents the amounts recoverable from the FDIC for future expected losses, and the amounts due from the FDIC for claims related to covered losses the Company have incurred less amounts due back to the FDIC relating to shared recoveries.

The following table summarizes the activity related to the FDIC indemnification asset for the three and six months ended June 30, 2011 and 2010:

(in thousands)

	Three months ended June 30,
	2011
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	40,379		$	37,875		$	53,618		$	131,872
Change in FDIC indemnification asset		(2,895	)		(811	)		(1,845	)		(5,551	)
Transfers to due from FDIC and other		(1,366	)		(1,065	)		(6,962	)		(9,393	)
Balance, end of period	$	36,118		$	35,999		$	44,811			116,928
	Three months ended June 30,
	2010
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	71,696		$	70,259		$	-		$	141,955
Acquisitions		-			-			99,160			99,160
Change in FDIC indemnification asset		539			(360	)		84			263
Transfers to due from FDIC and other		(167	)		(15,301	)		(556	)		(16,024	)
Balance, end of period	$	72,068		$	54,598		$	98,688		$	225,354
	Six months ended June 30,
	2011
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	40,606		$	43,726		$	62,081		$	146,413
Change in FDIC indemnification asset		1,850			(4,921	)		425			(2,646	)
Transfers to due from FDIC and other		(6,338	)		(2,806	)		(17,695	)		(26,839	)
Balance, end of period	$	36,118		$	35,999		$	44,811			116,928
	Six months ended June 30,
	2010
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	-		$	-		$	-		$	-
Acquisitions		71,755			76,603			99,160			247,518
Change in FDIC indemnification asset		939			(150	)		84			873
Transfers to due from FDIC and other		(626	)		(21,855	)		(556	)		(23,037	)
Balance, end of period	$	72,068		$	54,598		$	98,688		$	225,354

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Fair Value Measurement (Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis) (Details) (USD $)	Jun. 30, 2011		Mar. 31, 2011	Dec. 31, 2010		Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009
Trading securities	$ 2,522,000			$ 3,024,000
Available for sale securities	3,177,460,000			2,919,180,000
Mortgage servicing rights, at fair value	16,350,000.000		15,605,000.000	14,454,000.000		12,895,000.000	13,628,000.000	12,625,000.000
Derivatives	1,979,000			1,060,000
Total assets measured at fair value	3,198,311,000			2,937,718,000
Junior subordinated debentures, at fair value	81,766,000			80,688,000
Derivatives	1,518,000			361,000
Total liabilities measured at fair value	83,284,000			81,049,000
Obligations of States and Political Subdivisions [Member]
Trading securities	501,000			1,282,000
Available for sale securities	222,898,000			216,726,000
Obligations of States and Political Subdivisions [Member] | Level 1 [Member]
Trading securities	501,000			1,282,000
Obligations of States and Political Subdivisions [Member] | Level 2 [Member]
Available for sale securities	222,898,000			216,726,000
Trading Equity Securities [Member]
Trading securities	1,926,000			1,645,000
Trading Equity Securities [Member] | Level 1 [Member]
Trading securities	1,926,000			1,645,000
Other Investments Securities [Member]
Trading securities	95,000	[1]		97,000	[1]
Other Investments Securities [Member] | Level 1 [Member]
Trading securities	95,000	[1]		97,000	[1]
U.S. Treasury and Agencies [Member]
Available for sale securities	118,953,000			118,789,000
U.S. Treasury and Agencies [Member] | Level 2 [Member]
Available for sale securities	118,953,000			118,789,000
Residential Mortgage-Backed Securities and Collateralized Mortgage Obligations [Member]
Available for sale securities	2,833,429,000			2,581,504,000
Residential Mortgage-Backed Securities and Collateralized Mortgage Obligations [Member] | Level 2 [Member]
Available for sale securities	2,833,429,000			2,581,504,000
Other Debt Securities [Member]
Available for sale securities	150,000			152,000
Other Debt Securities [Member] | Level 2 [Member]
Available for sale securities	150,000			152,000
Investments in Mutual Funds and Other Equity Securities [Member]
Available for sale securities	2,030,000			2,009,000
Investments in Mutual Funds and Other Equity Securities [Member] | Level 2 [Member]
Available for sale securities	2,030,000			2,009,000
Level 1 [Member]
Total assets measured at fair value	2,522,000			3,024,000
Level 2 [Member]
Derivatives	1,979,000			1,060,000
Total assets measured at fair value	3,179,439,000			2,920,240,000
Derivatives	1,518,000			361,000
Total liabilities measured at fair value	1,518,000			361,000
Level 3 [Member]
Mortgage servicing rights, at fair value	16,350,000			14,454,000
Total assets measured at fair value	16,350,000			14,454,000
Junior subordinated debentures, at fair value	81,766,000			80,688,000
Total liabilities measured at fair value	$ 81,766,000			$ 80,688,000

[1] Principally represents U.S. Treasury and agencies or residential mortgage-backed securities issued or guaranteed by governmental agencies

XML



Shareholders' Equity (Summary of Restricted Stock Unit Activity) (Details) (Restricted Stock [Member], USD $) In Thousands, except Per Share data	6 Months Ended
	Jun. 30, 2011
Restricted Stock [Member]
Restricted Shares Outstanding - Balance, beginning of period	401
Restricted Shares Outstanding - Granted	279
Restricted Shares Outstanding - Released	(68)
Restricted Shares Outstanding - Forfeited/expired	(13)
Restricted Shares Outstanding - Balance, end of period	599
Weighted Average Grant Date Fair Value - Balance, beginning of period	$ 15.29
Weighted Average Grant Date Fair Value - Granted	$ 11.02
Weighted Average Grant Date Fair Value - Released	$ 18.57
Weighted Average Grant Date Fair Value - Forfeited/expired	$ 13.31
Weighted Average Grant Date Fair Value - Balance, end of period	$ 12.98

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Shareholders' Equity (Summary of Stock Option Activity) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2011
Shareholders' Equity
Options Outstanding - Beginning balance	2,067
Options Outstanding, Granted	237
Options Outstanding, Exercised	(40)
Options Outstanding, Forfeited/expired	(87)
Options Outstanding - Ending balance	2,177
Weighted-Avg Exercise Price - Beginning balance	$ 14.82
Weighted-Avg Exercise Price, Granted	$ 11.01
Weighted-Avg Exercise Price, Exercised	$ 7.67
Weighted-Avg Exercise Price, Forfeited/expired	$ 15.62
Weighted-Avg Exercise Price - Ending balance	$ 14.50
Weighted-Avg Remaining Contractual Term (Years)	6.00
Aggregate Intrinsic Value	$ 1,692
Options exercisable, end of period - Options Outstanding	1,284
Options exercisable, end of period - Weighted-Avg Exercise Price	$ 16.36
Options exercisable, end of period - Weighted-Avg Remaining Contractual Term (Years)	4.22
Options exercisable, end of period - Aggregate Intrinsic Value	$ 1,288

XML



Allowance for Non-Covered Loan Loss and Credit Quality (Tables)

6 Months Ended

Jun. 30, 2011

Allowance for Non-Covered Loan Loss and Credit Quality

Activity in the Non-Covered Allowance for Loan and Lease Losses

Three Months Ended June 30, 2011
	Commercial      Real Estate		Commercial		Residential		Consumer   & Other		Unallocated			Total
Balance, beginning of period	$	63,528	$	20,798	$	5,626	$	856	$	7,025		$	97,833
Charge-offs		(12,883)		(3,179)		(2,195)		(354)		-			(18,611)
Recoveries		2,208		695		100		111		-			3,114
Provision		9,129		5,436		1,623		255		(984	)		15,459
Balance, end of period	$	61,982	$	23,750	$	5,154	$	868	$	6,041		$	97,795
	Three Months Ended June 30, 2010
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Unallocated			Total
Balance, beginning of period	$	70,460	$	20,890	$	8,235	$	863	$	10,336		$	110,784
Charge-offs		(19,605)		(9,961)		(1,201)		(787)		-			(31,554)
Recoveries		4,312		370		50		185		-			4,917
Provision		13,048		8,548		2,689		587		4,895			29,767
Balance, end of period	$	68,215	$	19,847	$	9,773	$	848	$	15,231		$	113,914
	Six Months Ended June 30, 2011
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Unallocated			Total
Balance, beginning of period	$	64,405	$	22,146	$	5,926	$	803	$	8,641		$	101,921
Charge-offs		(24,314)		(11,355)		(2,929)		(888)		-			(39,486)
Recoveries		3,453		1,091		121		206		-			4,871
Provision		18,438		11,868		2,036		747		(2,600)			30,489
Balance, end of period	$	61,982	$	23,750	$	5,154	$	868	$	6,041		$	97,795
	Six Months Ended June 30, 2010
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Unallocated			Total
Balance, beginning of period	$	67,281	$	24,583	$	5,811	$	455	$	9,527		$	107,657
Charge-offs		(35,535)		(32,865)		(1,837)		(1,076)		-			(71,313)
Recoveries		4,596		649		170		282		-			5,697
Provision		31,873		27,480		5,629		1,187		5,704			71,873
Balance, end of period	$	68,215	$	19,847	$	9,773	$	848	$	15,231		$	113,914

June 30, 2011
	Commercial   Real Estate		Commercial		Residential		Consumer & Other		Unallocated		Total
Allowance for non-covered loans and leases:
Collectively evaluated for impairment	$	59,277	$	20,812	$	5,136	$	868	$	6,041	$	92,134
Individually evaluated for impairment		2,705		2,938		18		-		-		5,661
Total	$	61,982	$	23,750	$	5,154	$	868	$	6,041	$	97,795
Non-covered loans and leases:
Collectively evaluated for impairment	$	3,663,034	$	1,330,749	$	522,309	$	34,584			$	5,550,676
Individually evaluated for impairment		166,464		29,921		178		-				196,563
Total	$	3,829,498	$	1,360,670	$	522,487	$	34,584			$	5,747,239

	June 30, 2010
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Unallocated		Total
Allowance for non-covered loans and leases:
Collectively evaluated for impairment	$	61,127	$	19,836	$	9,548	$	848	$	15,231	$	106,590
Individually evaluated for impairment		7,088		11		225		-				7,324
Total	$	68,215	$	19,847	$	9,773	$	848	$	15,231	$	113,914
Non-covered loans and leases:
Collectively evaluated for impairment	$	3,783,102	$	1,203,558	$	465,633	$	34,215			$	5,486,508
Individually evaluated for impairment		194,373		52,295		4,502		-				251,170
Total	$	3,977,475	$	1,255,853	$	470,135	$	34,215			$	5,737,678

(1) The gross non-covered loan and lease balance excludes deferred loans fees of $11.7 million at June 30, 2011 and $11.0 million at June 30, 2010.

Summary of Reserve for Unfunded Commitments Activity

	Three Months Ended June 30, 2011
	Commercial     Real Estate		Commercial		Residential		Consumer   & Other		Total
Balance, beginning of period	$	76	$	621	$	162	$	52	$	911
Net change to other expense		(15)		84		7		1		77
Balance, end of period	$	61	$	705	$	169	$	53	$	988
	Three Months Ended June 30, 2010
	Commercial     Real Estate		Commercial		Residential		Consumer   & Other		Total
Balance, beginning of period	$	47	$	531	$	140	$	47	$	765
Net change to other expense		(6)		(21)		(4)		-		(31)
Balance, end of period	$	41	$	510	$	136	$	47	$	734
	Six Months Ended June 30, 2011
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Balance, beginning of period	$	33	$	575	$	158	$	52	$	818
Net change to other expense		28		130		11		1		170
Balance, end of period	$	61	$	705	$	169	$	53	$	988
	Six Months Ended June 30, 2010
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Balance, beginning of period	$	57	$	484	$	144	$	46	$	731
Net change to other expense		(16)		26		(8)		1		3
Balance, end of period	$	41	$	510	$	136	$	47	$	734
	Commercial Real Estate		Commercial		Residential		Consumer & Other		Total
Unfunded commitments:
June 30, 2011	$	61,478	$	674,210	$	226,790	$	45,483	$	1,007,961
June 30, 2010		41,354		501,667		209,643		39,938		792,602

Non-Covered Loans Sold

	Three months ended June 30				Six months ended June 30
	2011		2010		2011		2010
Commercial real estate
Term & multifamily	$	1,385	$	969	$	3,884	$	10,728
Construction & development		-		-		-		1,175
Residential development		-		1,399		2		5,434
Commercial
Term		-		3,210		151		3,210
LOC & other		-		-		2,740		462
Total	$	1,385	$	5,578	$	6,777	$	21,009

Non-Covered Non-Accrual Loans and Loans Past Due

	June 30, 2011
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Total Past Due		Nonaccrual		Current		Total Non-covered Loans and Leases
Commercial real estate
Term & multifamily	$	15,154	$	16,940	$	555	$	32,649	$	53,059	$	3,446,426	$	3,532,134
Construction & development		99		-		-		99		8,093		176,515		184,707
Residential development		2,573		-		-		2,573		25,858		84,226		112,657
Commercial
Term		1,548		957		750		3,255		8,070		561,077		572,402
LOC & other		476		495		5,713		6,684		14,809		766,775		788,268
Residential
Mortgage		1,357		908		4,467		6,732		-		238,302		245,034
Home equity loans & lines		1,800		1,277		1,123		4,200		-		273,253		277,453
Consumer & other		207		60		529		796		-		33,788		34,584
Total	$	23,214	$	20,637	$	13,137	$	56,988	$	109,889	$	5,580,362	$	5,747,239
Deferred loan fees, net														(11,686	)
Total													$	5,735,553

	December 31, 2010
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing		Total Past Due		Nonaccrual		Current		Total Non-covered Loans and Leases
Commercial real estate
Term & multifamily	$	14,596	$	8,328	$	3,008	$	25,932	$	49,162	$	3,408,381	$	3,483,475
Construction & development		2,172		6,726		-		8,898		20,124		218,792		247,814
Residential development		640		-		-		640		34,586		112,587		147,813
Commercial
Term		2,010		932		-		2,942		6,271		500,240		509,453
LOC & other		5,939		1,418		18		7,375		28,034		712,010		747,419
Residential
Mortgage		1,314		1,101		3,372		5,787		-		216,629		222,416
Home equity loans & lines		1,096		1,351		232		2,679		-		275,906		278,585
Consumer & other		361		233		441		1,035		-		32,008		33,043
Total	$	28,128	$	20,089	$	7,071	$	55,288	$	138,177	$	5,476,553	$	5,670,018
Deferred loan fees, net														(11,031	)
Total													$	5,658,987

Non-covered Impaired Loans

	June 30, 2011
	Unpaid Principal Balance		Recorded Investment		Related Allowance
With no related allowance recorded:
Commercial real estate
Term & multifamily	$	65,617	$	53,059	$	-
Construction & development		33,793		22,446		-
Residential development		50,608		35,396		-
Commercial
Term		10,498		8,923		-
LOC & other		46,650		15,087		-
Residential
Mortgage		-		-		-
Home equity loans & lines		-		-		-
Consumer & other		-		-		-
With an allowance recorded:
Commercial real estate
Term & multifamily		12,705		12,705		396
Construction & development		13,363		12,343		122
Residential development		30,515		30,515		2,187
Commercial
Term		198		198		7
LOC & other		5,713		5,713		2,931
Residential
Mortgage		178		178		18
Home equity loans & lines		-		-		-
Consumer & other		-		-		-
Total:
Commercial real estate		206,601		166,464		2,705
Commercial		63,059		29,921		2,938
Residential		178		178		18
Consumer & other		-		-		-
Total	$	269,838	$	196,563	$	5,661

	December 31, 2010
	Unpaid Principal Balance		Recorded Investment		Related Allowance
With no related allowance recorded:
Commercial real estate
Term & multifamily	$	62,605	$	49,790	$	-
Construction & development		33,091		25,558		-
Residential development		63,859		39,011		-
Commercial
Term		8,024		6,969		-
LOC & other		56,046		19,814		-
Residential
Mortgage		-		-		-
Home equity loans & lines		-		-		-
Consumer & other		-		-		-
With an allowance recorded:
Commercial real estate
Term & multifamily		29,926		28,070		1,614
Construction & development		-		-		-
Residential development		46,059		44,504		906
Commercial
Term		205		205		9
LOC & other		9,878		8,519		2,702
Residential
Mortgage		179		179		8
Home equity loans & lines		-		-		-
Consumer & other		-		-		-
Total:
Commercial real estate		235,540		186,933		2,520
Commercial		74,153		35,507		2,711
Residential		179		179		8
Consumer & other		-		-		-
Total	$	309,872	$	222,619	$	5,239

Schedule of Average Recorded Investment and Interest Income Recognized

	For the three months ended June 30, 2011				For the three months ended June 30, 2010
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate
Term & multifamily	$	54,086	$	-	$	57,851	$	-
Construction & development		21,063		-		24,668		-
Residential development		37,841		-		31,695		-
Commercial
Term		8,307		-		10,768		-
LOC & other		17,978		-		42,009		-
Residential
Mortgage		-		-		-		-
Home equity loans & lines		-		-		-		-
Consumer & other		-		-		-		-
With an allowance recorded:
Commercial real estate
Term & multifamily		15,733		233		29,731		220
Construction & development		8,905		266		4,264		-
Residential development		32,943		320		60,605		506
Commercial
Term		202		11		225		12
LOC & other		2,857		-		-		4
Residential
Mortgage		178		1		4,474		62
Home equity loans & lines		-		-		35		-
Consumer & other		-		-		-		-
Total:
Commercial real estate		170,571		819		208,814		726
Commercial		29,344		11		53,002		16
Residential		178		1		4,509		62
Consumer & other		-		-		-		-
Total	$	200,093	$	831	$	266,325	$	804
	For the six months ended June 30, 2011				For the six months ended June 30, 2010
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial real estate
Term & multifamily	$	54,725	$	-	$	60,241	$	-
Construction & development		23,238		-		28,665		-
Residential development		37,762		-		39,438		-
Commercial
Term		8,678		-		10,673		-
LOC & other		24,724		-		46,905		-
Residential
Mortgage		-		-		-		-
Home equity loans & lines		-		-		-		-
Consumer & other		-		-		-		-
With an allowance recorded:
Commercial real estate
Term & multifamily		19,995		424		32,856		451
Construction & development		6,506		338		2,843		-
Residential development		40,165		670		60,053		937
Commercial
Term		268		23		296		24
LOC & other		2,532		-		200		8
Residential
Mortgage		1,369		3		4,705		121
Home equity loans & lines		7		-		23		1
Consumer & other		-		-		-		-
Total:
Commercial real estate		182,391		1,432		224,096		1,388
Commercial		36,202		23		58,074		32
Residential		1,376		3		4,728		122
Consumer & other		-		-		-		-
Total	$	219,969	$	1,458	$	286,898	$	1,542

Internal Risk Rating by Loan Class

	June 30, 2011
	Pass/ Watch		Special Mention		Substandard		Doubtful/Loss		Impaired		Total
Commercial real estate
Term & multifamily	$	3,004,552	$	317,006	$	144,812	$	-	$	65,764	$	3,532,134
Construction & development		111,702		18,625		19,591		-		34,789		184,707
Residential development		24,704		10,021		12,021		-		65,911		112,657
Commercial
Term		509,666		29,983		23,632		-		9,121		572,402
LOC & other		690,219		41,091		36,158		-		20,800		788,268
Residential
Mortgage		238,198		2,369		2,003		2,286		178		245,034
Home equity loans & lines		273,916		2,414		556		567		-		277,453
Consumer & other		33,789		267		36		492		-		34,584
Total	$	4,886,746	$	421,776	$	238,809	$	3,345	$	196,563	$	5,747,239
Deferred loan fees, net												(11,686	)
Total											$	5,735,553
	December 31, 2010
	Pass/ Watch		Special Mention		Substandard		Doubtful/Loss		Impaired		Total
Commercial real estate
Term & multifamily	$	2,978,116	$	314,094	$	113,405	$	-	$	77,860	$	3,483,475
Construction & development		145,108		25,295		51,853		-		25,558		247,814
Residential development		27,428		13,764		23,106		-		83,515		147,813
Commercial
Term		472,512		17,658		12,109		-		7,174		509,453
LOC & other		646,163		30,761		42,162		-		28,333		747,419
Residential
Mortgage		216,899		2,414		786		2,138		179		222,416
Home equity loans & lines		275,906		2,447		125		107		-		278,585
Consumer & other		32,008		595		29		411		-		33,043
Total	$	4,794,140	$	407,028	$	243,575	$	2,656	$	222,619	$	5,670,018
Deferred loan fees, net												(11,031	)
Total											$	5,658,987

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Non-covered Loans and Leases

6 Months Ended

Jun. 30, 2011

Non-covered Loans and Leases

Non-covered Loans and Leases

Note 4 – Non-covered Loans and Leases

The following table presents the major types of non-covered loans recorded in the balance sheets as of June 30, 2011 and December 31, 2010:

(in thousands)

	June 30, 2011			December 31, 2010
Commercial real estate
Term & multifamily	$	3,532,134		$	3,483,475
Construction & development		184,707			247,814
Residential development		112,657			147,813
Commercial
Term		572,402			509,453
LOC & other		788,268			747,419
Residential
Mortgage		245,034			222,416
Home equity loans & lines		277,453			278,585
Consumer & other		34,584			33,043
Total		5,747,239			5,670,018
Deferred loan fees, net		(11,686	)		(11,031	)
Total	$	5,735,553		$	5,658,987

As of June 30, 2011, loans totaling $3.5 billion were pledged to secure borrowings and available lines of credit.

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Investment Securities (Gross Realized Gains and Losses on Sales of Available-for-Sale Securities Table) (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Gains	$ 6,482		$ 6,482	$ 2
Losses	804		804	1
Obligations of States and Political Subdivisions [Member]
Gains	7		7	2
Losses				1
Residential Mortgage-Backed Securities and Collateralized Mortgage Obligations [Member]
Gains	6,475		6,475
Losses	$ 804		$ 804

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Condensed Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Dec. 31, 2010
Condensed Consolidated Statements of Changes in Shareholders' Equity
Cash dividends on common stock, per share	$ 0.1	$ 0.20

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Derivatives (Summary of Types of Derivatives and Gains (Losses) Recorded) (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Derivative gains (losses)	$ (2,113)	$ (2,477)	$ (1,806)	$ (3,142)
Interest Rate Contracts [Member] | Rate Lock Commitments [Member] | Mortgage Banking Revenue [Member]
Derivative gains (losses)	(18)	1,040	92	1,207
Interest Rate Contracts [Member] | Forward Sales Commitments [Member] | Mortgage Banking Revenue [Member]
Derivative gains (losses)	(2,180)	(3,517)	(1,983)	(4,349)
Interest Rate Swap [Member] | Other Income [Member]
Derivative gains (losses)	$ 85		$ 85

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Condensed Consolidated Statements of Cash Flows (USD $)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 31,252,000	$ 11,977,000
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of investment premiums, net	16,389,000	7,196,000
Gain on sale of investment securities, net	(5,678,000)	(1,000)
Other-than-temporary impairment on investment securities held to maturity	72,000	289,000
Loss on sale of non-covered other real estate owned	1,160,000	1,156,000
Gain on sale of covered other real estate owned	(898,000)	(1,519,000)
Valuation adjustment on non-covered other real estate owned	5,518,000	1,721,000
Valuation adjustment on covered other real estate owned	1,921,000	5,000
PROVISION FOR NON-COVERED LOAN AND LEASE LOSSES	30,489,000	71,873,000
Provision for covered loan and lease losses	11,023,000
Bargain purchase gain on acquisition		(6,437,000)
Change in FDIC indemnification asset	2,646,000	(873,000)
Depreciation, amortization and accretion	6,218,000	7,186,000
Increase in mortgage servicing rights	(2,407,000)	(2,008,000)
Change in mortgage servicing rights carried at fair value	511,000	1,800,000
Change in junior subordinated debentures carried at fair value	1,078,000	(6,076,000)
Stock-based compensation	1,987,000	1,425,000
Net decrease in trading account assets	502,000	530,000
Gain on sale of loans	(1,819,000)	(3,441,000)
Origination of loans held for sale	(290,058,000)	(248,744,000)
Proceeds from sales of loans held for sale	307,087,000	245,788,000
Excess tax benefits from the exercise of stock options	(4,000)	(56,000)
Change in other assets and liabilities:
Net decrease in other assets	5,954,000	15,369,000
Net increase in other liabilities	4,759,000	27,810,000
Net cash provided by operating activities	127,680,000	124,970,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities available for sale	(690,720,000)	(197,709,000)
Purchases of investment securities held to maturity	1,573,000
Proceeds from investment securities available for sale	441,721,000	133,573,000
Proceeds from investment securities held to maturity	757,000	883,000
Redemption of restricted equity securities	1,636,000	92,000
Net non-covered loan and lease (originations) paydowns	(136,582,000)	169,418,000
Net covered loan and lease paydowns	63,417,000	49,379,000
Proceeds from sales of loans	6,777,000	21,009,000
Proceeds from disposals of furniture and equipment	180,000	1,096,000
Purchases of premises and equipment	(16,877,000)	(33,687,000)
Net proceeds from FDIC indemnification asset	48,850,000	6,764,000
Proceeds from sales of non-covered other real estate owned	17,026,000	13,931,000
Proceeds from sales of covered other real estate owned	7,355,000	2,832,000
Proceeds from sale of acquired insurance portfolio		5,150,000
Cash acquired in merger, net of cash consideration paid		179,046,000
Net cash (used) provided by investing activities	(258,033,000)	351,777,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in deposit liabilities	(286,867,000)	(29,686,000)
Net increase (decrease) in securities sold under agreements to repurchase	47,130,000	(465,000)
Repayment of term debt	(5,000,000)	(138,719,000)
Redemption of preferred stock		(214,181,000)
Proceeds from issuance of preferred stock		198,289,000
Net proceeds from issuance of common stock		89,786,000
Redemption of warrants		(4,500,000)
Dividends paid on preferred stock		(3,682,000)
Dividends paid on common stock	(11,506,000)	(9,137,000)
Excess tax benefits from stock based compensation	4,000	56,000
Proceeds from stock options exercised	309,000	918,000
Retirement of common stock	(1,960,000)	(259,000)
Net cash used provided by financing activities	(257,890,000)	(111,580,000)
Net (decrease) increase in cash and cash equivalents	(388,243,000)	365,167,000
Cash and cash equivalents, beginning of period	1,004,125,000	605,413,000
Cash and cash equivalents, end of period	615,882,000	970,580,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest	41,302,000	46,373,000
Income taxes	6,850,000	150,000
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Change in unrealized gains on investment securities available for sale, net of taxes	11,983,000	16,855,000
Change in unrealized losses on investment securities held to maturity related to factors other than credit, net of taxes	26,000	388,000
Cash dividend declared on common and preferred stock and payable after period-end	5,754,000	5,743,000
Transfer of non-covered loans to non-covered other real estate owned	25,322,000	17,895,000
Transfer of covered loans to covered other real estate owned	8,668,000	2,669,000
Transfer from FDIC indemnification asset to due from FDIC and other	26,839,000	23,037,000
Transfer of covered loans to non-covered loans	4,114,000
Conversion of preferred stock to common stock		198,289,000
Acquisitions:
Assets acquired		1,512,048,000
Liabilities assumed		$ 1,505,611,000

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2011

Segment Information

Summary of Financial Information by Reportable Segment

Segment Information
(in thousands)
					Three Months Ended June 30, 2011
		Community			Wealth		Mortgage
		Banking			Management		Banking			Consolidated
Interest income	$	121,953		$	3,304		$	3,160		$	128,417
Interest expense		18,019			465			572			19,056
Net interest income		103,934			2,839		2,588				109,361
Provision for non-covered loan and lease losses		15,459			-		-				15,459
Provision for covered loan and lease losses		3,755			-		-				3,755
Non-interest income		11,092			3,671		4,864				19,627
Non-interest expense		74,952			3,941			4,314			83,207
Income before income taxes		20,860			2,569		3,138				26,567
Provision for income taxes		6,381			1,146			1,255			8,782
Net income		14,479			1,423		1,883				17,785
Dividends and undistributed earnings allocated to participating securities		86			-			-			86
Net earnings available to common shareholders	$	14,393		$	1,423		$	1,883		$	17,699
					Six Months Ended June 30, 2011
		Community			Wealth		Mortgage
		Banking			Management		Banking			Consolidated
Interest income	$	241,010		$	5,771		$	6,528		$	253,309
Interest expense		36,831			1,045			1,170			39,046
Net interest income		204,179			4,726			5,358			214,263
Provision for non-covered loan losses		30,489			-			-			30,489
Provision for covered loan losses		11,023			-			-			11,023
Non-interest income		23,768			7,267		10,177				41,212
Non-interest expense		150,711			8,043			8,654			167,408
Income before income taxes		35,724			3,950			6,881			46,555
Provision for income taxes		11,174			1,377			2,752			15,303
Net income		24,550			2,573			4,129			31,252
Dividends and undistributed earnings allocated to participating securities		148			-			-			148
Net earnings available to common shareholders	$	24,402		$	2,573		$	4,129		$	31,104
					Three Months Ended June 30, 2010
		Community			Wealth		Mortgage
		Banking			Management Banking Consolidated
Interest income	$	110,109		$	2,427		$	3,068		$	115,604
Interest expense		22,360			307			637			23,304
Net interest income		87,749			2,120			2,431			92,300
Provision for non-covered loan and lease losses		29,767			-			-			29,767
Provision for covered loan and lease losses		-			-			-			-
Non-interest income		11,771			3,540			3,252			18,563
Non-interest expense		67,332			4,087			3,414			74,833
Income (loss) before income taxes		2,421			1,573			2,269			6,263
Provision (benefit from) for income taxes		1,374			519			907			2,800
Net income (loss)		1,047			1,054			1,362			3,463
Preferred stock dividends		-			-			-			-
Dividends and undistributed earnings allocated to participating securities		16			-			-			16
Net earnings (loss) available to common shareholders	$	1,031		$	1,054		$	1,362		$	3,447
					Six Months Ended June 30, 2010
		Community			Wealth		Mortgage
		Banking			Management Banking Consolidated
Interest income	$	214,209		$	4,821		$	5,943		$	224,973
Interest expense		43,687			602			1,332			45,621
Net interest income		170,522			4,219			4,611			179,352
Provision for non-covered loan losses		71,873			-			-			71,873
Provision for covered loan losses		-			-			-			-
Non-interest income		35,218			6,631			6,761			48,610
Non-interest expense		130,362			7,863			6,479			144,704
Income (loss) before income taxes		3,505			2,987			4,893			11,385
(Benefit from) provision for income taxes		(3,504	)		955			1,957			(592	)
Net income (loss)		7,009			2,032			2,936			11,977
Preferred stock dividends		12,192			-			-			12,192
Dividends and undistributed earnings allocated to participating securities		31			-			-			31
Net (loss) earnings available to common shareholders	$	(5,214	)	$	2,032		$	2,936		$	(246	)
					June 30, 2011
		Community			Wealth		Mortgage
		Banking			Management Banking Consolidated
Total assets	$	11,092,529		$	48,885	$	318,278		$	11,459,692
Total loans and leases (covered and non-covered)	$	6,161,711		$	34,514	$	238,004		$	6,434,229
Total deposits	$	8,859,870		$	267,037	$	19,505		$	9,146,412
					December 31, 2010
		Community			Wealth		Mortgage
		Banking			Management Banking Consolidated
Total assets	$	11,314,681		$	37,757	$	316,272		$	11,668,710
Total loans and leases (covered and non-covered)	$	6,198,532		$	23,631	$	222,722		$	6,444,885
Total deposits	$	9,160,058		$	262,148	$	11,599		$	9,433,805

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Non-covered Loans and Leases (Tables)

6 Months Ended

Jun. 30, 2011

Non-covered Loans and Leases

Schedule of Major Types of Non-covered Loans

	June 30, 2011			December 31, 2010
Commercial real estate
Term & multifamily	$	3,532,134		$	3,483,475
Construction & development		184,707			247,814
Residential development		112,657			147,813
Commercial
Term		572,402			509,453
LOC & other		788,268			747,419
Residential
Mortgage		245,034			222,416
Home equity loans & lines		277,453			278,585
Consumer & other		34,584			33,043
Total		5,747,239			5,670,018
Deferred loan fees, net		(11,686	)		(11,031	)
Total	$	5,735,553		$	5,658,987

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Segment Information (Summary of Financial Information by Reportable Segment) (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010	Dec. 31, 2009
Interest income	$ 128,417	$ 115,604	$ 253,309	$ 224,973
Interest expense	19,056	23,304	39,046	45,621
Net interest income	109,361	92,300	214,263	179,352
Provision	15,459	29,767	30,489	71,873
Provision for covered loan and lease losses	3,755		11,023
Non-interest income	19,627	18,563	41,212	48,610
Non-interest expense	83,207	74,833	167,408	144,704
Income (loss) before income taxes	26,567	6,263	46,555	11,385
Provision for income taxes	8,782	2,800	15,303	(592)
Net income (loss)	17,785	3,463	31,252	11,977	28,326
Preferred stock dividends				12,192	3,686
Dividends and undistributed earnings allocated to participating securities	86	16	148	31
Net earnings (loss) available to common shareholders	17,699	3,447	31,104	(246)
Total assets	11,459,692		11,459,692		11,668,710	15,000,000
Total loans and leases (covered and non-covered)	6,434,229		6,434,229		6,444,885
Total deposits	9,146,412		9,146,412		9,433,805
Community Banking [Member]
Interest income	121,953	110,109	241,010	214,209
Interest expense	18,019	22,360	36,831	43,687
Net interest income	103,934	87,749	204,179	170,522
Provision	15,459	29,767	30,489	71,873
Provision for covered loan and lease losses	3,755		11,023
Non-interest income	11,092	11,771	23,768	35,218
Non-interest expense	74,952	67,332	150,711	130,362
Income (loss) before income taxes	20,860	2,421	35,724	3,505
Provision for income taxes	6,381	1,374	11,174	(3,504)
Net income (loss)	14,479	1,047	24,550	7,009
Preferred stock dividends				12,192
Dividends and undistributed earnings allocated to participating securities	86	16	148	31
Net earnings (loss) available to common shareholders	14,393	1,031	24,402	(5,214)
Total assets	11,092,529		11,092,529		11,314,681
Total loans and leases (covered and non-covered)	6,161,711		6,161,711		6,198,532
Total deposits	8,859,870		8,859,870		9,160,058
Wealth Management [Member]
Interest income	3,304	2,427	5,771	4,821
Interest expense	465	307	1,045	602
Net interest income	2,839	2,120	4,726	4,219
Non-interest income	3,671	3,540	7,267	6,631
Non-interest expense	3,941	4,087	8,043	7,863
Income (loss) before income taxes	2,569	1,573	3,950	2,987
Provision for income taxes	1,146	519	1,377	955
Net income (loss)	1,423	1,054	2,573	2,032
Dividends and undistributed earnings allocated to participating securities
Net earnings (loss) available to common shareholders	1,423	1,054	2,573	2,032
Total assets	48,885		48,885		37,757
Total loans and leases (covered and non-covered)	34,514		34,514		23,631
Total deposits	267,037		267,037		262,148
Mortgage Banking [Member]
Interest income	3,160	3,068	6,528	5,943
Interest expense	572	637	1,170	1,332
Net interest income	2,588	2,431	5,358	4,611
Non-interest income	4,864	3,252	10,177	6,761
Non-interest expense	4,314	3,414	8,654	6,479
Income (loss) before income taxes	3,138	2,269	6,881	4,893
Provision for income taxes	1,255	907	2,752	1,957
Net income (loss)	1,883	1,362	4,129	2,936
Dividends and undistributed earnings allocated to participating securities
Net earnings (loss) available to common shareholders	1,883	1,362	4,129	2,936
Total assets	318,278		318,278		316,272
Total loans and leases (covered and non-covered)	238,004		238,004		222,722
Total deposits	$ 19,505		$ 19,505		$ 11,599

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Allowance for Non-Covered Loan Loss and Credit Quality (Non-Covered Loans Sold) (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Total	$ 1,385	$ 5,578	$ 6,777	$ 21,009
Commercial Real Estate [Member] | Residential Development [Member]
Total		1,399	2	5,434
Commercial [Member] | LOC & Other [Member]
Total			2,740	462
Commercial Real Estate [Member] | Construction & Development [Member]
Total				1,175
Commercial Real Estate [Member] | Term & Multifamily [Member]
Total	1,385	969	3,884	10,728
Commercial [Member] | Term [Member]
Total		$ 3,210	$ 151	$ 3,210

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Allowance for Non-Covered Loan Loss and Credit Quality (Non-covered Impaired Loans) (Details) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Unpaid Principal Balance	$ 269,838	$ 309,872
Recorded Investment	196,563	222,619
Impaired loans	5,661	5,239
Commercial [Member] | LOC & Other [Member] | With No Related Allowance Recorded [Member]
Unpaid Principal Balance	46,650	56,046
Recorded Investment	15,087	19,814
Commercial [Member] | Term [Member] | With No Related Allowance Recorded [Member]
Unpaid Principal Balance	10,498	8,024
Recorded Investment	8,923	6,969
Commercial Real Estate [Member] | Residential Development [Member] | With No Related Allowance Recorded [Member]
Unpaid Principal Balance	50,608	63,859
Recorded Investment	35,396	39,011
Commercial Real Estate [Member] | Construction & Development [Member] | With No Related Allowance Recorded [Member]
Unpaid Principal Balance	33,793	33,091
Recorded Investment	22,446	25,558
Commercial Real Estate [Member] | Term & Multifamily [Member] | With No Related Allowance Recorded [Member]
Unpaid Principal Balance	65,617	62,605
Recorded Investment	53,059	49,790
Residential [Member] | With No Related Allowance Recorded [Member] | Mortgage [Member]
Unpaid Principal Balance
Recorded Investment
Impaired loans
Residential [Member] | With No Related Allowance Recorded [Member] | Home Equity Loans & Lines [Member]
Unpaid Principal Balance
Recorded Investment
Impaired loans
Residential [Member] | With No Related Allowance Recorded [Member] | Consumer & Other [Member]
Unpaid Principal Balance
Recorded Investment
Impaired loans
Commercial [Member] | LOC & Other [Member] | With an Allowance Recorded [Member]
Unpaid Principal Balance	5,713	9,878
Recorded Investment	5,713	8,519
Impaired loans	2,931	2,702
Commercial [Member] | Term [Member] | With an Allowance Recorded [Member]
Unpaid Principal Balance	198	205
Recorded Investment	198	205
Impaired loans	7	9
Commercial Real Estate [Member] | Residential Development [Member] | With an Allowance Recorded [Member]
Unpaid Principal Balance	30,515	46,059
Recorded Investment	30,515	44,504
Impaired loans	2,187	906
Commercial Real Estate [Member] | Construction & Development [Member] | With an Allowance Recorded [Member]
Unpaid Principal Balance	13,363
Recorded Investment	12,343
Impaired loans	122
Commercial Real Estate [Member] | Term & Multifamily [Member] | With an Allowance Recorded [Member]
Unpaid Principal Balance	12,705	29,926
Recorded Investment	12,705	28,070
Impaired loans	396	1,614
Residential [Member] | Mortgage [Member] | With an Allowance Recorded [Member]
Unpaid Principal Balance	178	179
Recorded Investment	178	179
Impaired loans	18	8
Residential [Member] | Home Equity Loans & Lines [Member] | With an Allowance Recorded [Member]
Unpaid Principal Balance
Recorded Investment
Impaired loans
Residential [Member] | Consumer & Other [Member] | With an Allowance Recorded [Member]
Unpaid Principal Balance
Recorded Investment
Impaired loans
Commercial [Member]
Unpaid Principal Balance	63,059	74,153
Recorded Investment	29,921	35,507
Impaired loans	2,938	2,711
Consumer & Other [Member]
Unpaid Principal Balance
Recorded Investment
Impaired loans
Commercial Real Estate [Member]
Unpaid Principal Balance	206,601	235,540
Recorded Investment	166,464	186,933
Impaired loans	2,705	2,520
Residential [Member]
Unpaid Principal Balance	178	179
Recorded Investment	178	179
Impaired loans	$ 18	$ 8

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Investment Securities (Schedule of Maturities of Investment Securities) (Details) (USD $) In Thousands	Jun. 30, 2011
Available-for-sale Securities, Three months or less, Amortized Cost	$ 17,296
Available-for-sale Securities, Over three months through twelve months, Amortized Cost	287,207
Available-for-sale Securities, After one through five Years, Amortized Cost	1,992,369
Available-for-sale Securities, After five through ten years, Amortized Cost	750,874
Available-for-sale Securities, After ten years, Amortized Cost	65,368
Available-for-sale Securities, Amortized Cost	3,115,073
Available-for-sale Securities, Three months or less, Fair Value	17,379
Available-for-sale Securities, Over three months through twelve months, Fair Value	294,045
Available-for-sale Securities, After one through five years, Fair Value	2,037,495
Available-for-sale Securities, After five through ten years, Fair Value	761,393
Available-for-sale Securities, After ten years, Fair Value	65,118
Available-for-sale Securities, Fair Value	3,177,460
Held-to-maturity Securities, Three months or less, Amortized Cost	590
Held-to-maturity Securities, Over three months through twelve months, Amortized Cost	85
Held-to-maturity Securities, After one through five years, Amortized Cost	613
Held-to-maturity Securities, After five through ten years, Amortized Cost	49
Held-to-maturity Securities, After ten years, Amortized Cost	4,216
Held-to-maturity Securities, Amortized Cost	5,553
Held-to-maturity Securities, Three months or less, Fair Value	591
Held-to-maturity Securities, Over three months through twelve months, Fair Value	85
Held-to-maturity Securities, After one through five years, Fair Value	618
Held-to-maturity Securities, After five through ten years, Fair Value	50
Held-to-maturity Securities, After ten years, Fair Value	4,389
Held-to-maturity Securities, Fair Value	5,733
Other Investments Securities [Member]
Available-for-sale Securities, Amortized Cost	1,959
Available-for-sale Securities, Fair Value	2,030
Held-to-maturity Securities, Amortized Cost
Held-to-maturity Securities, Fair Value

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Covered Assets and FDIC Indemnification (Number Of Loans And Acquired Unpaid Principal Balance) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2011
Evergreen Bank [Member] | Performing Loans [Member]
Number of Pools	15
Number of Loans	1,263
Acquired Unpaid Principal Balance	$ 247.9
Rainier Pacific Bank [Member] | Performing Loans [Member]
Number of Pools	19
Number of Loans	3,647
Acquired Unpaid Principal Balance	516.9
Nevada Security Bank [Member] | Performing Loans [Member]
Number of Pools	19
Number of Loans	402
Acquired Unpaid Principal Balance	224.2
Evergreen Bank [Member] | Non Performing Loans [Member]
Number of Pools	8
Number of Loans	127
Acquired Unpaid Principal Balance	120.6
Rainier Pacific Bank [Member] | Non Performing Loans [Member]
Number of Pools	10
Number of Loans	39
Acquired Unpaid Principal Balance	44.5
Nevada Security Bank [Member] | Non Performing Loans [Member]
Number of Pools	9
Number of Loans	106
Acquired Unpaid Principal Balance	103.4
Evergreen Bank [Member]
Number of Pools	23
Number of Loans	1,390
Acquired Unpaid Principal Balance	368.5
Rainier Pacific Bank [Member]
Number of Pools	29
Number of Loans	3,686
Acquired Unpaid Principal Balance	561.4
Nevada Security Bank [Member]
Number of Pools	28
Number of Loans	508
Acquired Unpaid Principal Balance	$ 327.6

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 1 – Summary of Significant Accounting Policies

Basis of Financial Statement Presentation

The accounting and financial reporting policies of Umpqua Holdings Corporation (referred to in this report as "we", "our" or "the Company") conform to accounting principles generally accepted in the United States of America. The accompanying interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Umpqua Bank ("Bank"), and Umpqua Investments, Inc. ("Umpqua Investments"). All material inter-company balances and transactions have been eliminated. The consolidated financial statements have not been audited. In preparing these financial statements, the Company has evaluated events and transactions subsequent to June 30, 2011 for potential recognition or disclosure. A more detailed description of our accounting policies is included in the 2010 Annual Report filed on Form 10-K. These interim condensed consolidated financial statements should be read in conjunction with the financial statements and related notes contained in the 2010 Annual Report filed on Form 10-K.

In management's opinion, all accounting adjustments necessary to accurately reflect the financial position and results of operations on the accompanying financial statements have been made. These adjustments include normal and recurring accruals considered necessary for a fair and accurate presentation. The results for interim periods are not necessarily indicative of results for the full year or any other interim period. Certain reclassifications of prior period amounts have been made to conform to current classifications.

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Non-covered Other Real Estate Owned (Schedule of Changes in Non-covered Other Real Estate Owned) (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Non-covered Other Real Estate Owned
Balance, beginning of period	$ 34,512	$ 18,872	$ 32,791	$ 24,566
Additions to OREO	15,419	11,888	25,322	17,895
Dispositions of OREO	(12,134)	(4,293)	(18,186)	(15,087)
Valuation adjustments in the period	(3,388)	(814)	(5,518)	(1,721)
Balance, end of period	$ 34,409	$ 25,653	$ 34,409	$ 25,653

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Business Combinations (Narrative) (Details) (USD $)	6 Months Ended		0 Months Ended						0 Months Ended		6 Months Ended					0 Months Ended		3 Months Ended		6 Months Ended					6 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2011 Sto	Jun. 30, 2010	Jan. 22, 2010 Evergreen Bank [Member]	Jun. 30, 2011 Evergreen Bank [Member]	Jun. 30, 2011 Evergreen Bank [Member] FDIC Loss and Loss Recovery Sharing And Absorption Threshold Minimum [Member]	Jun. 30, 2011 Evergreen Bank [Member] FDIC Loss and Loss Recovery Sharing And Absorption Threshold Maximum [Member]	Jun. 30, 2011 Evergreen Bank [Member] Non-Single Family Residential [Member]	Jun. 30, 2011 Evergreen Bank [Member] Single Family Residential [Member]	Feb. 26, 2010 Rainier Pacific Bank [Member]	Jun. 30, 2011 Rainier Pacific Bank [Member]	Jun. 30, 2011 Rainier Pacific Bank [Member]	Jun. 30, 2011 Rainier Pacific Bank [Member] FDIC Loss and Loss Recovery Sharing And Absorption Threshold Minimum [Member]	Jun. 30, 2011 Rainier Pacific Bank [Member] FDIC Loss and Loss Recovery Sharing And Absorption Threshold Maximum [Member]	Jun. 30, 2011 Rainier Pacific Bank [Member] Non-Single Family Residential [Member]	Jun. 30, 2011 Rainier Pacific Bank [Member] Single Family Residential [Member]	Jun. 18, 2010 Nevada Security Bank [Member]	Jun. 30, 2011 Nevada Security Bank [Member]	Jun. 30, 2011 Nevada Security Bank [Member]	Jun. 30, 2010 Nevada Security Bank [Member]	Jun. 30, 2011 Nevada Security Bank [Member]	Jun. 30, 2010 Nevada Security Bank [Member]	Jun. 30, 2011 Nevada Security Bank [Member] FDIC Loss and Loss Recovery Sharing And Absorption [Member]	Jun. 30, 2011 Nevada Security Bank [Member] Non-Single Family Residential [Member]	Jun. 30, 2011 Nevada Security Bank [Member] Single Family Residential [Member]	Jun. 30, 2011 Evergreen And Ranier [Member]	Jun. 30, 2011 Evergreen And Ranier [Member]	Jun. 30, 2010 Evergreen And Ranier [Member]	Jun. 30, 2011 Evergreen And Ranier [Member]	Jun. 30, 2010 Evergreen And Ranier [Member]
Date that Umpqua Bank assumed operations											February 26, 2010									June 18, 2010					January 22, 2010
FDIC loss absorption percentage					80.00%	95.00%						80.00%	95.00%									80.00%
FDIC loss recoveries absorption percentage					80.00%	95.00%						80.00%	95.00%									80.00%
Covered asset value for FDIC absorption					$ 90,000,000	$ 90,000,000						$ 95,000,000	$ 95,000,000
Umpqua to incur losses before loss sharing, amount	30,200,000
Length of loss sharing arrangement, by loan type, years							5	10						5	10								5	10
Length of loss recovery provisions, by loan type, years							8	10						8	10								8	10
Number of store locations assumed				6							14							5		5
Business acquisition revenue	9,400,000.0000																	2,800,000	529,000	9,800,000							10,400,000	24,500,000	22,800,000
Non-interest expense from acquisition, included in Umpqua operations																		2,600,000	582,000	6,100,000						4,800,000	6,600,000	9,400,000	11,300,000
Earnings (loss) added by acquisition, included in Umpqua operations																		532,000,000	34,000	627,000,000						1,400,000	2,500,000	5,400,000	7,600,000
Merger-related expenses, incurred in connection with acquisitions																		12,000	1,600,000	23,000	3,300,000					52,000,000		102,000,000
Cost basis net assets (liabilities)				58,800,000							50,300,000							53,600,000		53,600,000
Core deposit intangible assets recognized and deductable for income tax purposes										1,100,000							322,000
Purchase of furniture equipment and real estate				344,000							26,300,000							2.0		2.0
Cash payment received from (paid to) the FDIC											59,400,000							30,000,000		30,000,000
Bargain purchase gain on acquisition		6,437,000	6,437,000
(Goodwill) recognized in connection with acquisition											$ 27,500,000							$ 36,500,000		$ 36,500,000
Number of store locations available for purchase under option agreement	1

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Income Taxes (Policy)

6 Months Ended

Jun. 30, 2011

Income Taxes

Income Tax, Policy [Policy Text Block]

Income taxes are accounted for using the asset and liability method. Under this method a deferred tax asset or liability is determined based on the enacted tax rates which will be in effect when the differences between the financial statement carrying amounts and tax basis of existing assets and liabilities are expected to be reported in the Company's income tax returns. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established to reduce the net carrying amount of deferred tax assets if it is determined to be more likely than not, that all or some portion of the potential deferred tax asset will not be realized.

Income Tax Uncertainties, Policy [Policy Text Block]

The Company applies the provisions of FASB ASC 740, Income Taxes, relating to the accounting for uncertainty in income taxes. The Company periodically reviews its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This review takes into consideration the status of current taxing authorities' examinations of the Company's tax returns, recent positions taken by the taxing authorities on similar transactions, if any, and the overall tax environment.

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Covered Assets and FDIC Indemnification Asset (Reconciliation of Acquired Loan Portfolios) (Details) (USD $)	Jun. 30, 2011	Jan. 22, 2010 Evergreen Bank [Member]	Feb. 26, 2010 Rainier Pacific Bank [Member]	Jun. 18, 2010 Nevada Security Bank [Member]
Undiscounted contractual cash flows	$ 1,716,322,000.000	$ 498,216,000.000	$ 821,972,000.000	$ 396,134,000.000
Undiscounted cash flows not expected to be collected (nonaccretable difference)	(364,926,000.000)	(124,131,000.000)	(125,774,000.000)	(115,021,000.000)
Undiscounted cash flows expected to be collected	1,351,396,000.000	374,085,000.000	696,198,000.000	281,113,000.000
Accretable yield at acquisition	(425,056,000.000)	(121,592,000.000)	(237,858,000.000)	(65,606,000.000)
Estimated fair value of loans acquired at acquisition	$ 926,340,000.000	$ 252,493,000.000	$ 458,340,000.000	$ 215,507,000.000

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Shareholders' Equity (Summary of Nonvested Restricted Share Activity) (Details) (USD $) In Thousands, except Per Share data	6 Months Ended
	Jun. 30, 2011
Restricted Stock [Member]
Restricted Shares Outstanding - Balance, beginning of period	401
Restricted Shares Outstanding - Granted	279
Restricted Shares Outstanding - Released	(68)
Restricted Shares Outstanding - Forfeited/expired	(13)
Restricted Shares Outstanding - Balance, end of period	599
Weighted Average Grant Date Fair Value - Balance, beginning of period	$ 15.29
Weighted Average Grant Date Fair Value - Granted	$ 11.02
Weighted Average Grant Date Fair Value - Released	$ 18.57
Weighted Average Grant Date Fair Value - Forfeited/expired	$ 13.31
Weighted Average Grant Date Fair Value - Balance, end of period	$ 12.98
Nonvested Restricted Stock Units (RSUs) [Member]
Restricted Shares Outstanding - Balance, beginning of period	225
Restricted Shares Outstanding - Granted	105
Restricted Shares Outstanding - Released	(63)
Restricted Shares Outstanding - Forfeited/expired	(48)
Restricted Shares Outstanding - Balance, end of period	219
Weighted Average Grant Date Fair Value - Balance, beginning of period	$ 11.13
Weighted Average Grant Date Fair Value - Granted	$ 10.42
Weighted Average Grant Date Fair Value - Released	$ 14.33
Weighted Average Grant Date Fair Value - Forfeited/expired	$ 14.33
Weighted Average Grant Date Fair Value - Balance, end of period	$ 9.17

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Fair Value Measurement (Fair Value Assets and Liabilities Measured on Nonrecurring Basis) (Details) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Total investment securities, held to maturity	$ 5,733	$ 4,774
Residential Mortgage-Backed Securities and Collateralized Mortgage Obligations [Member] | Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity
Residential Mortgage-Backed Securities and Collateralized Mortgage Obligations [Member] | Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity
Residential Mortgage-Backed Securities and Collateralized Mortgage Obligations [Member] | Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity	217	1,226
Residential Mortgage-Backed Securities and Collateralized Mortgage Obligations [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity	217	1,226
Non-covered Loans and Leases [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity	51,968	74,639
Level 1 [Member] | Non-covered Loans and Leases [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity
Level 2 [Member] | Non-covered Loans and Leases [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity
Level 3 [Member] | Non-covered Loans and Leases [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity	51,968	74,639
Non-covered Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity	7,270	7,958
Level 1 [Member] | Non-covered Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity
Level 2 [Member] | Non-covered Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity
Level 3 [Member] | Non-covered Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity	7,270	7,958
Covered Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity	5,963	8,708
Level 1 [Member] | Covered Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity
Level 2 [Member] | Covered Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity
Level 3 [Member] | Covered Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total investment securities, held to maturity	5,963	8,708
Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total	0
Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total	0
Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Total	65,418	92,531
Fair Value, Measurements, Nonrecurring [Member]
Total	$ 65,418	$ 92,531

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Junior Subordinated Debentures (Junior Subordinated Debentures) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2011
Issued Amount	$ 230,061
Carrying Value	184,471	[1]
Umpqua Statutory Trust III [Member] | CIB Capital Trust [Member] | Amortized Cost [Member]
Interest Rate Adjustment	3.45%
Umpqua Statutory Trust III [Member] | Estimated Fair Value [Member]
Issue Date	October 2002
Issued Amount	30,928
Carrying Value	21,235	[1]
Rate	Floating (5)	[2],[3]
Effective Rate	11.62%	[4]
Maturity Date	November 2032
Redemption Date	November 2007
Umpqua Statutory Trust III [Member] | Subordinated Debt Carrying Value [Member]
Interest Rate Adjustment	3.45%
Umpqua Statutory Trust IV [Member] | Umpqua Statutory Trust V [Member] | Estimated Fair Value [Member]
Interest Rate Adjustment	2.85%
Umpqua Statutory Trust IV [Member] | Estimated Fair Value [Member]
Issue Date	December 2003
Issued Amount	10,310
Carrying Value	6,551	[1]
Rate	Floating (6)	[2],[5]
Effective Rate	11.64%	[4]
Maturity Date	January 2034
Redemption Date	January 2009
Umpqua Statutory Trust IV [Member] | Subordinated Debt Carrying Value [Member]
Interest Rate Adjustment	2.85%
Umpqua Statutory Trust II [Member] | Estimated Fair Value [Member]
Issue Date	October 2002
Issued Amount	20,619
Carrying Value	13,999	[1]
Rate	Floating (4)	[2],[6]
Effective Rate	11.62%	[4]
Maturity Date	October 2032
Redemption Date	October 2007
Umpqua Statutory Trust II [Member] | Subordinated Debt Carrying Value [Member]
Interest Rate Adjustment	3.35%
Umpqua Statutory Trust V [Member] | Estimated Fair Value [Member]
Issue Date	December 2003
Issued Amount	10,310
Carrying Value	6,540	[1]
Rate	Floating (6)	[2],[5]
Effective Rate	11.64%	[4]
Maturity Date	March 2034
Redemption Date	March 2009
Umpqua Master Trust I [Member] | Estimated Fair Value [Member]
Issue Date	August 2007
Issued Amount	41,238
Carrying Value	20,733	[1]
Rate	Floating (7)	[2],[7]
Effective Rate	11.69%	[4]
Maturity Date	September 2037
Redemption Date	September 2012
Umpqua Master Trust I [Member] | Subordinated Debt Carrying Value [Member]
Interest Rate Adjustment	1.35%
Umpqua Master Trust IB [Member] | Estimated Fair Value [Member]
Issue Date	September 2007
Issued Amount	20,619
Carrying Value	12,708	[1]
Rate	Floating (8)	[2],[8]
Effective Rate	11.65%	[4]
Maturity Date	December 2037
Redemption Date	December 2012
Umpqua Master Trust IB [Member] | Subordinated Debt Carrying Value [Member]
Interest Rate Adjustment	2.75%
HB Capital Trust I [Member] | Amortized Cost [Member]
Issue Date	March 2000
Issued Amount	5,310
Carrying Value	6,357	[1]
Rate	10.875%	[2]
Effective Rate	8.20%	[4]
Maturity Date	March 2030
Redemption Date	March 2010
Humboldt Bancorp Statutory Trust I [Member] | Amortized Cost [Member]
Issue Date	February 2001
Issued Amount	5,155
Carrying Value	5,916	[1]
Rate	10.200%	[2]
Effective Rate	8.23%	[4]
Maturity Date	February 2031
Redemption Date	February 2011
Humboldt Bancorp Statutory Trust II [Member] | Subordinated Debt Carrying Value [Member]
Interest Rate Adjustment	3.60%
Humboldt Bancorp Statutory Trust II [Member] | Amortized Cost [Member]
Issue Date	December 2001
Issued Amount	10,310
Carrying Value	11,405	[1]
Rate	Floating (9)	[2],[9]
Effective Rate	3.00%	[4]
Maturity Date	December 2031
Redemption Date	December 2006
Humboldt Bancorp Statutory Trust III [Member] | Subordinated Debt Carrying Value [Member]
Interest Rate Adjustment	2.95%
Humboldt Bancorp Statutory Trust III [Member] | Amortized Cost [Member]
Issue Date	September 2003
Issued Amount	27,836
Carrying Value	30,670	[1]
Rate	Floating (10)	[10],[2]
Effective Rate	2.48%	[4]
Maturity Date	September 2033
Redemption Date	September 2008
CIB Capital Trust [Member] | Amortized Cost [Member]
Issue Date	November 2002
Issued Amount	10,310
Carrying Value	11,241	[1]
Rate	Floating (5)	[2],[3]
Effective Rate	3.01%	[4]
Maturity Date	November 2032
Redemption Date	November 2007
Western Sierra Statutory Trust I [Member] | Subordinated Debt Carrying Value [Member]
Interest Rate Adjustment	3.58%
Western Sierra Statutory Trust I [Member] | Amortized Cost [Member]
Issue Date	July 2001
Issued Amount	6,186
Carrying Value	6,186	[1]
Rate	Floating (11)	[11],[2]
Effective Rate	3.85%	[4]
Maturity Date	July 2031
Redemption Date	July 2006
Western Sierra Statutory Trust II [Member] | Amortized Cost [Member]
Issue Date	December 2001
Issued Amount	10,310
Carrying Value	10,310	[1]
Rate	Floating (9)	[2],[9]
Effective Rate	3.85%	[4]
Maturity Date	December 2031
Redemption Date	December 2006
Interest Rate Adjustment	3.60%
Western Sierra Statutory Trust III [Member] | Subordinated Debt Carrying Value [Member]
Interest Rate Adjustment	2.90%
Western Sierra Statutory Trust III [Member] | Amortized Cost [Member]
Issue Date	September 2003
Issued Amount	10,310
Carrying Value	10,310	[1]
Rate	Floating (12)	[12],[2]
Effective Rate	3.18%	[4]
Maturity Date	September 2033
Redemption Date	September 2008
Western Sierra Statutory Trust IV [Member] | Amortized Cost [Member]
Issue Date	September 2003
Issued Amount	10,310
Carrying Value	10,310	[1]
Rate	Floating (12)	[12],[2]
Effective Rate	3.18%	[4]
Maturity Date	September 2033
Redemption Date	September 2008
Interest Rate Adjustment	2.90%
Estimated Fair Value [Member]
Issued Amount	134,024
Carrying Value	81,766	[1]
Amortized Cost [Member]
Issued Amount	96,037
Carrying Value	$ 102,705	[1]

[1] Includes purchase accounting adjustments, net of accumulated amortization, for junior subordinated debentures assumed in connection with previous mergers as well as fair value adjustments related to trusts recorded at fair value.

[2] Contractual interest rate of junior subordinated debentures.

[3] Rate based on LIBOR plus 3.45%, adjusted quarterly.

[4] Effective interest rate based upon the carrying value as of June 2011.

[5] Rate based on LIBOR plus 2.85%, adjusted quarterly.

[6] Rate based on LIBOR plus 3.35%, adjusted quarterly.

[7] Rate based on LIBOR plus 1.35%, adjusted quarterly.

[8] Rate based on LIBOR plus 2.75%, adjusted quarterly.

[9] Rate based on LIBOR plus 3.60%, adjusted quarterly.

[10] Rate based on LIBOR plus 2.95%, adjusted quarterly.

[11] Rate based on LIBOR plus 3.58%, adjusted quarterly.

[12] Rate based on LIBOR plus 2.90%, adjusted quarterly.

XML



Allowance for Non-Covered Loan Loss and Credit Quality (Internal Risk Rating By Loan Class) (Details) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Commercial real estate, Term & multifamily	$ 3,532,134,000	$ 3,483,475,000
Commercial real estate, Construction & development	184,707,000	247,814,000
Commercial real estate, Residential development	112,657,000	147,813,000
Commercial, Term	572,402,000	509,453,000
Commercial, LOC & other	788,268,000	747,419,000
Residential, Mortgage	245,034,000	222,416,000
Residential, Home equity loans & lines	277,453,000	278,585,000
Consumer & other	34,584,000	33,043,000
Total	5,747,239,000	5,670,018,000
Deferred loan fees, net	(11,686,000)	(11,031,000)
Total loans and leases	5,735,553,000	5,658,987,000
Pass/Watch [Member]
Commercial real estate, Term & multifamily	3,004,552,000	2,978,116,000
Commercial real estate, Construction & development	111,702,000	145,108,000
Commercial real estate, Residential development	24,704,000	27,428,000
Commercial, Term	509,666,000	472,512,000
Commercial, LOC & other	690,219,000	646,163,000
Residential, Mortgage	238,198,000	216,899,000
Residential, Home equity loans & lines	273,916,000	275,906,000
Consumer & other	33,789,000	32,008,000
Total	4,886,746,000	4,794,140,000
Special Mention [Member]
Commercial real estate, Term & multifamily	317,006,000	314,094,000
Commercial real estate, Construction & development	18,625,000	25,295,000
Commercial real estate, Residential development	10,021,000	13,764,000
Commercial, Term	29,983,000	17,658,000
Commercial, LOC & other	41,091,000	30,761,000
Residential, Mortgage	2,369,000	2,414,000
Residential, Home equity loans & lines	2,414,000	2,447,000
Consumer & other	267,000	595,000
Total	421,776,000	407,028,000
Substandard [Member]
Commercial real estate, Term & multifamily	144,812,000	113,405,000
Commercial real estate, Construction & development	19,591,000	51,853,000
Commercial real estate, Residential development	12,021,000	23,106,000
Commercial, Term	23,632,000	12,109,000
Commercial, LOC & other	36,158,000	42,162,000
Residential, Mortgage	2,003,000	786,000
Residential, Home equity loans & lines	556,000	125,000
Consumer & other	36,000	29,000
Total	238,809,000	243,575,000
Doubtful/Loss [Member]
Residential, Mortgage	2,286,000	2,138,000
Residential, Home equity loans & lines	567,000	107,000
Consumer & other	492,000	411,000
Total	3,345,000	2,656,000
Impaired [Member]
Commercial real estate, Term & multifamily	65,764,000	77,860,000
Commercial real estate, Construction & development	34,789,000	25,558,000
Commercial real estate, Residential development	65,911,000	83,515,000
Commercial, Term	9,121,000	7,174,000
Commercial, LOC & other	20,800,000	28,333,000
Residential, Mortgage	178,000	179,000
Total	$ 196,563,000	$ 222,619,000

XML



Covered Assets and FDIC Indemnification Asset (Tables)

6 Months Ended

Jun. 30, 2011

Covered Assets and FDIC Indemnification Asset

Number Of Loans And Acquired Unpaid Principal Balance

	Evergreen		Rainier Pacific		Nevada Security
Performing loans ("Analogized ASC 310-30"):
Number of Pools		15		19		19
Number of Loans		1,263		3,647		402
Acquired Unpaid Principal Balance	$	247.9	$	516.9	$	224.2
Non-performing loans ("Classic ASC 310-30"):
Number of Pools		8		10		9
Number of Loans		127		39		106
Acquired Unpaid Principal Balance	$	120.6	$	44.5	$	103.4
Total Portfolio:
Number of Pools		23		29		28
Number of Loans		1,390		3,686		508
Acquired Unpaid Principal Balance	$	368.5	$	561.4	$	327.6

Estimated Fair Value of Acquired Loans

	Evergreen		Rainier		Nevada Security		Total
	January 22, 2010		February 26, 2010		June 18, 2010
Commercial real estate
Term & multifamily	$	141,076	$	331,869	$	154,119	$	627,064
Construction & development		18,832		562		9,481		28,875
Residential development		16,219		10,340		15,641		42,200
Commercial
Term		27,272		14,850		18,257		60,379
LOC & other		23,965		18,169		11,408		53,542
Residential
Mortgage		11,886		39,897		1,539		53,322
Home equity loans & lines		8,308		31,029		4,421		43,758
Consumer & other		4,935		11,624		641		17,200
Total	$	252,493	$	458,340	$	215,507	$	926,340

Reconciliation of Acquired Loan Portfolios

	Evergreen			Rainier			Nevada Security			Total
	January 22, 2010			February 26, 2010			June 18, 2010
Undiscounted contractual cash flows	$	498,216		$	821,972		$	396,134		$	1,716,322
Undiscounted cash flows not expected to be collected (nonaccretable difference)		(124,131	)		(125,774	)		(115,021	)		(364,926	)
Undiscounted cash flows expected to be collected		374,085			696,198			281,113			1,351,396
Accretable yield at acquisition		(121,592	)		(237,858	)		(65,606	)		(425,056	)
Estimated fair value of loans acquired at acquisition	$	252,493		$	458,340		$	215,507		$	926,340

Covered Loans

	June 30, 2011
	Evergreen		Rainier		Nevada Security		Total
Commercial real estate
Term & multifamily	$	107,772	$	276,358	$	131,819	$	515,949
Construction & development		12,398		690		6,730		19,818
Residential development		7,055		171		8,721		15,947
Commercial
Term		15,406		8,913		12,932		37,251
LOC & other		9,655		12,623		6,202		28,480
Residential
Mortgage		8,079		31,120		1,869		41,068
Home equity loans & lines		5,278		22,925		3,251		31,454
Consumer & other		2,293		6,416		-		8,709
Total	$	167,936	$	359,216	$	171,524	$	698,676

	December 31, 2010
	Evergreen		Rainier		Nevada Security		Total
Commercial real estate
Term & multifamily	$	124,743	$	303,585	$	141,314	$	569,642
Construction & development		14,162		854		7,419		22,435
Residential development		11,024		2,310		11,372		24,706
Commercial
Term		18,828		10,811		12,961		42,600
LOC & other		11,876		14,320		9,031		35,227
Residential
Mortgage		8,129		35,026		1,669		44,824
Home equity loans & lines		6,737		25,163		3,725		35,625
Consumer & other		2,781		8,058		-		10,839
Total	$	198,280	$	400,127	$	187,491	$	785,898

Changes in Accretable Yield in Acquired Loans

	Three months ended June 30,
	2011
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	75,081		$	155,285		$	69,301		$	299,667
Accretion to interest income		(7,904	)		(8,396	)		(5,926	)		(22,226	)
Disposals		(4,181	)		(2,803	)		(1,403	)		(8,387	)
Reclassifications (to)/from nonaccretable difference		4,473			(89	)		6,622			11,006
Balance, end of period	$	67,469		$	143,997		$	68,594		$	280,060
	Three months ended June 30,
	2010
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	118,119		$	233,678		$	-		$	351,797
Additions resulting from acquisitions		-			-			65,606			65,606
Accretion to interest income		(3,528	)		(8,575	)		(553	)		(12,656	)
Disposals		(2,234	)		(1,931	)		(90	)		(4,255	)
Reclassifications (to)/from nonaccretable difference		(28,422	)		(17,490	)		86			(45,826	)
Balance, end of period	$	83,935		$	205,682		$	65,049		$	354,666
	Six months ended June 30,
	2011
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	90,771		$	172,615		$	73,515		$	336,901
Accretion to interest income		(15,613	)		(17,111	)		(11,049	)		(43,773	)
Disposals		(6,973	)		(9,447	)		(2,807	)		(19,227	)
Reclassifications (to)/from nonaccretable difference		(716	)		(2,060	)		8,935			6,159
Balance, end of period	$	67,469		$	143,997		$	68,594		$	280,060
	Six months ended June 30,
	2010
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	-		$	-		$	-		$	-
Additions resulting from acquisitions		121,592			237,858			65,606			425,056
Accretion to interest income		(6,759	)		(11,599	)		(553	)		(18,911	)
Disposals		(2,825	)		(3,388	)		(90	)		(6,303	)
Reclassifications (to)/from nonaccretable difference		(28,073	)		(17,189	)		86			(45,176	)
Balance, end of period	$	83,935		$	205,682		$	65,049		$	354,666

Internal Risk Rating by Coverd Loans Class

	June 30, 2011
	Pass/ Watch		Special Mention		Substandard		Doubtful/Loss		Total
Commercial real estate
Term & multifamily	$	419,493	$	38,176	$	47,689	$	10,591	$	515,949
Construction & development		3,060		2,919		8,489		5,350		19,818
Residential development		1,646		-		9,012		5,289		15,947
Commercial
Term		24,285		1,970		8,385		2,611		37,251
LOC & other		19,506		1,953		6,720		301		28,480
Residential
Mortgage		41,051		-		17		-		41,068
Home equity loans & lines		31,393		-		61		-		31,454
Consumer & other		8,709		-		-		-		8,709
Total	$	549,143	$	45,018	$	80,373	$	24,142	$	698,676
	December 31, 2010
	Pass/ Watch		Special Mention		Substandard		Doubtful/Loss		Total
Commercial real estate
Term & multifamily	$	485,238	$	32,150	$	44,833	$	7,421	$	569,642
Construction & development		6,155		3,799		7,640		4,841		22,435
Residential development		6,625		1,322		12,907		3,852		24,706
Commercial
Term		31,760		2,119		7,087		1,634		42,600
LOC & other		22,960		4,246		7,183		838		35,227
Residential
Mortgage		44,524		-		300		-		44,824
Home equity loans & lines		34,998		-		627		-		35,625
Consumer & other		10,827		-		12		-		10,839
Total	$	643,087	$	43,636	$	80,589	$	18,586	$	785,898

Summary of Activity in Covered Other Real Estate Owned

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Balance, beginning of period	$	27,689		$	8,995		$	29,863		$	-
Acquisition		-			17,938			-			26,939
Additions to covered OREO		5,632			2,560			8,668			2,669
Dispositions of covered OREO		(2,503	)		(1,198	)		(6,457	)		(1,313	)
Valuation adjustments in the period		(665	)		(5	)		(1,921	)		(5	)
Balance, end of period	$	30,153		$	28,290		$	30,153		$	28,290

Summary of Activity Related to the FDIC Indemnification Asset

	Three months ended June 30,
	2011
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	40,379		$	37,875		$	53,618		$	131,872
Change in FDIC indemnification asset		(2,895	)		(811	)		(1,845	)		(5,551	)
Transfers to due from FDIC and other		(1,366	)		(1,065	)		(6,962	)		(9,393	)
Balance, end of period	$	36,118		$	35,999		$	44,811			116,928
	Three months ended June 30,
	2010
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	71,696		$	70,259		$	-		$	141,955
Acquisitions		-			-			99,160			99,160
Change in FDIC indemnification asset		539			(360	)		84			263
Transfers to due from FDIC and other		(167	)		(15,301	)		(556	)		(16,024	)
Balance, end of period	$	72,068		$	54,598		$	98,688		$	225,354
	Six months ended June 30,
	2011
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	40,606		$	43,726		$	62,081		$	146,413
Change in FDIC indemnification asset		1,850			(4,921	)		425			(2,646	)
Transfers to due from FDIC and other		(6,338	)		(2,806	)		(17,695	)		(26,839	)
Balance, end of period	$	36,118		$	35,999		$	44,811			116,928
	Six months ended June 30,
	2010
	Evergreen			Rainier			Nevada Security			Total
Balance, beginning of period	$	-		$	-		$	-		$	-
Acquisitions		71,755			76,603			99,160			247,518
Change in FDIC indemnification asset		939			(150	)		84			873
Transfers to due from FDIC and other		(626	)		(21,855	)		(556	)		(23,037	)
Balance, end of period	$	72,068		$	54,598		$	98,688		$	225,354

XML



Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2011

Fair Value Measurement

Schedule of Carrying Value and Fair Value of Financial Instruments Not Recorded at Fair Value

	June 30, 2011				December 31, 2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
FINANCIAL ASSETS:
Cash and cash equivalents	$	615,882	$	615,882	$	1,004,125	$	1,004,125
Trading securities		2,522		2,522		3,024		3,024
Securities available for sale		3,177,460		3,177,460		2,919,180		2,919,180
Securities held to maturity		5,553		5,733		4,762		4,774
Loans held for sale		60,416		60,416		75,626		75,626
Non-covered loans and leases, net		5,637,758		5,691,951		5,557,066		5,767,506
Covered loans and leases, net		698,676		783,045		785,898		893,682
Restricted equity securities		32,839		32,839		34,475		34,475
Mortgage servicing rights		16,350		16,350		14,454		14,454
Bank owned life insurance assets		91,169		91,169		90,161		90,161
FDIC indemnification asset		116,928		63,211		146,413		90,011
Derivatives		1,979		1,979		1,060		1,060
Visa Class B common stock		-		18,311		-		15,987
FINANCIAL LIABILITIES:
Deposits	$	9,146,412	$	9,149,607	$	9,433,805	$	9,464,406
Securities sold under agreements to repurchase		120,889		120,889		73,759		73,759
Term debt		256,719		278,406		262,760		282,127
Junior subordinated debentures, at fair value		81,766		81,766		80,688		80,688
Junior subordinated debentures, at amortized cost		102,705		66,799		102,866		65,771
Derivatives		1,518		1,518		361		361

Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis

(in thousands)

	Fair Value at June 30, 2011
Description	Total		Level 1		Level 2		Level 3
Trading securities
Obligations of states and political subdivisions	$	501	$	501	$	-	$	-
Equity securities		1,926		1,926		-		-
Other investments securities(1)		95		95		-		-
Available for sale securities
U.S. Treasury and agencies		118,953		-		118,953		-
Obligations of states and political subdivisions		222,898		-		222,898		-
Residential mortgage-backed securities and collateralized mortgage obligations		2,833,429		-		2,833,429		-
Other debt securities		150		-		150		-
Investments in mutual funds and other equity securities		2,030		-		2,030		-
Mortgage servicing rights, at fair value		16,350		-		-		16,350
Derivatives		1,979		-		1,979		-
Total assets measured at fair value	$	3,198,311	$	2,522	$	3,179,439	$	16,350
Junior subordinated debentures, at fair value		81,766		-		-		81,766
Derivatives		1,518		-		1,518		-
Total liabilities measured at fair value	$	83,284	$	-	$	1,518	$	81,766

(in thousands)

	Fair Value at December 31, 2010
Description	Total		Level 1		Level 2		Level 3
Trading securities
Obligations of states and political subdivisions	$	1,282	$	1,282	$	-	$	-
Equity securities		1,645		1,645		-		-
Other investments securities(1)		97		97		-		-
Available for sale securities
U.S. Treasury and agencies		118,789		-		118,789		-
Obligations of states and political subdivisions		216,726		-		216,726		-
Residential mortgage-backed securities and collateralized mortgage obligations		2,581,504		-		2,581,504		-
Other debt securities		152		-		152		-
Investments in mutual funds and other equity securities		2,009		-		2,009		-
Mortgage servicing rights, at fair value		14,454		-		-		14,454
Derivatives		1,060		-		1,060		-
Total assets measured at fair value	$	2,937,718	$	3,024	$	2,920,240	$	14,454
Junior subordinated debentures, at fair value	$	80,688	$	-	$	-	$	80,688
Derivatives		361		-		361		-
Total liabilities measured at fair value	$	81,049	$	-	$	361	$	80,688

(1) Principally represents U.S. Treasury and agencies or residential mortgage-backed securities issued or guaranteed by governmental agencies.

Schedule of Reconciliation of Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) on a Recurring Basis

Three months ended June 30,	Beginning Balance		Change included in earnings			Purchases and issuances		Sales and settlements			Ending Balance		Net change in unrealized gains or (losses) relating to items held at end of period
2011
Mortgage servicing rights	$	15,605	$	(328	)	$	1,073	$	-		$	16,350	$	(45	)
Junior subordinated debentures		81,220		1,523			-		(977	)		81,766		1,523
2010
Mortgage servicing rights	$	13,628	$	(1,671	)	$	938	$	-		$	12,895	$	(1,368	)
Junior subordinated debentures		79,563		984			-		(957	)		79,590		984

(in thousands)

Six months ended June 30,	Beginning Balance		Change included in earnings			Purchases, issuances and settlements		Sales and settlements			Ending Balance		Net change in unrealized gains or (losses) relating to items held at end of period
2011
Mortgage servicing rights	$	14,454	$	(511	)	$	2,407	$	-		$	16,350	$	79
Junior subordinated debentures		80,688		3,033			-		(1,955	)		81,766		3,033
2010
Mortgage servicing rights	$	12,625	$	(1,800	)	$	2,070	$	-		$	12,895	$	(1,263	)
Junior subordinated debentures		85,666		(4,150	)		-		(1,926	)		79,590		(4,150	)

Three months ended June 30,	Beginning Balance		Change included in earnings			Purchases and issuances		Sales and settlements			Ending Balance		Net change in unrealized gains or (losses) relating to items held at end of period
2011
Mortgage servicing rights	$	15,605	$	(328	)	$	1,073	$	-		$	16,350	$	(45	)
Junior subordinated debentures		81,220		1,523			-		(977	)		81,766		1,523
2010
Mortgage servicing rights	$	13,628	$	(1,671	)	$	938	$	-		$	12,895	$	(1,368	)
Junior subordinated debentures		79,563		984			-		(957	)		79,590		984

(in thousands)

Six months ended June 30,	Beginning Balance		Change included in earnings			Purchases, issuances and settlements		Sales and settlements			Ending Balance		Net change in unrealized gains or (losses) relating to items held at end of period
2011
Mortgage servicing rights	$	14,454	$	(511	)	$	2,407	$	-		$	16,350	$	79
Junior subordinated debentures		80,688		3,033			-		(1,955	)		81,766		3,033
2010
Mortgage servicing rights	$	12,625	$	(1,800	)	$	2,070	$	-		$	12,895	$	(1,263	)
Junior subordinated debentures		85,666		(4,150	)		-		(1,926	)		79,590		(4,150	)

Fair Value Assets and Liabilities Measured on Nonrecurring Basis

	June 30, 2011
Description	Total		Level 1		Level 2		Level 3
Investment securities, held to maturity
Residential mortgage-backed securities and collateralized mortgage obligations	$	217	$	-	$	-	$	217
Non-covered loans and leases		51,968		-		-		51,968
Non-covered other real estate owned		7,270		-		-		7,270
Covered other real estate owned		5,963		-		-		5,963
	$	65,418	$	-	$	-	$	65,418
	December 31, 2010
Description	Total		Level 1		Level 2		Level 3
Investment securities, held to maturity
Residential mortgage-backed securities and collateralized mortgage obligations	$	1,226	$	-	$	-	$	1,226
Non-covered loans and leases		74,639		-		-		74,639
Non-covered other real estate owned		7,958		-		-		7,958
Covered other real estate owned		8,708						8,708
	$	92,531	$	-	$	-	$	92,531

Fair Value, Assets and Liabilities Measured on Recurring Basis, Gain (Loss) Included in Earnings

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Investment securities, held to maturity
Residential mortgage-backed securities and collateralized mortgage obligations	$	47	$	-	$	72	$	289
Non-covered loans and leases		17,278		31,449		33,194		64,589
Non-covered other real estate owned		3,388		814		5,518		1,721
Covered other real estate owned		665		-		1,921		-
Total loss from nonrecurring measurements	$	21,378	$	32,263	$	40,705	$	66,599

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Investment Securities (Tables)

6 Months Ended

Jun. 30, 2011

Investment Securities

Amortized Cost, Unrealized Gains and Losses, and Fair Value of Investment Securities

June 30, 2011

(in thousands)

	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
AVAILABLE FOR SALE:
U.S. Treasury and agencies	$	117,392	$	1,561	$	-	$	118,953
Obligations of states and political subdivisions		213,053		10,072		(227)		222,898
Residential mortgage-backed securities and collateralized mortgage obligations		2,782,517		54,657		(3,745)		2,833,429
Other debt securities		152		-		(2)		150
Investments in mutual funds and other equity securities		1,959		71		-		2,030
	$	3,115,073	$	66,361	$	(3,974)	$	3,177,460
HELD TO MATURITY:
Obligations of states and political subdivisions	$	1,945	$	3	$	-	$	1,948
Residential mortgage-backed securities and collateralized mortgage obligations		3,608		202		(25)		3,785
	$	5,553	$	205	$	(25)	$	5,733

December 31, 2010

(in thousands)

	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
AVAILABLE FOR SALE:
U.S. Treasury and agencies	$	117,551	$	1,239	$	(1)	$	118,789
Obligations of states and political subdivisions		213,129		4,985		(1,388)		216,726
Residential mortgage-backed securities and collateralized mortgage obligations		2,543,974		57,506		(19,976)		2,581,504
Other debt securities		152		-		-		152
Investments in mutual funds and other equity securities		1,959		50				2,009
	$	2,876,765	$	63,780	$	(21,365)	$	2,919,180
HELD TO MATURITY:
Obligations of states and political subdivisions	$	2,370	$	5	$	-	$	2,375
Residential mortgage-backed securities and collateralized mortgage obligations		2,392		216		(209)		2,399
	$	4,762	$	221	$	(209)	$	4,774

Schedule of Fair Value and Unrealized Losses of Securities

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
AVAILABLE FOR SALE:
Obligations of states and political subdivisions		10,716		210		1,831		17		12,547		227
Residential mortgage-backed securities and collateralized mortgage obligations		709,167		3,727		4,476		18		713,643		3,745
Other debt securities		-		-		150		2		150		2
Total temporarily impaired securities	$	719,883	$	3,937	$	6,457	$	37	$	726,340	$	3,974
HELD TO MATURITY:
Residential mortgage-backed securities and collateralized mortgage obligations	$	-	$	-	$	345	$	25	$	345	$	25
Total temporarily impaired securities	$	-	$	-	$	345	$	25	$	345	$	25

December 31, 2010

(in thousands)

	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
AVAILABLE FOR SALE:
U.S. Treasury and agencies	$	-	$	-	$	110	$	1	$	110	$	1
Obligations of states and political subdivisions		60,110		1,366		1,003		22		61,113		1,388
Residential mortgage-backed securities and collateralized mortgage obligations		1,238,483		19,968		1,539		8		1,240,022		19,976
Total temporarily impaired securities	$	1,298,593	$	21,334	$	2,652	$	31	$	1,301,245	$	21,365
HELD TO MATURITY:
Residential mortgage-backed securities and collateralized mortgage obligations	$	-	$	-	$	658	$	209	$	658	$	209
Total temporarily impaired securities	$	-	$	-	$	658	$	209	$	658	$	209

Other-than-Temporary Impairment Losses, Investment Securities

 

	Three months ended June 30,
	2011		2010
Total other-than-temporary impairment losses	$	110	$	-
Portion of other-than-temporary impairment losses recognized in other comprehensive income (1)		(63)		-
Net impairment losses recognized in earnings (2)	$	47	$	-
		Six months ended June 30,
	2011		2010
Total other-than-temporary impairment losses	$	110	$	5
Portion of other-than-temporary impairment losses (recognized in) transferred from other comprehensive income (1)		(38)		284
Net impairment losses recognized in earnings (2)	$	72	$	289

(1) Represents other-than-temporary impairment losses related to all other factors.

(2) Represents other-than-temporary impairment losses related to credit losses.

Summary of Significant Inputs Used to Estimate Credit Loss on Non-Agency Collateralized Mortgage Obligations

	2011			2010
	Range		Weighted	Range		Weighted
	Minimum	Maximum	Average	Minimum	Maximum	Average
Constant prepayment rate	5.0%	20.0%	14.4%	4.0%	25.0%	14.9%
Collateral default rate	5.0%	30.0%	13.2%	8.0%	45.0%	16.8%
Loss severity	30.0%	65.0%	39.0%	20.0%	50.0%	34.6%

Roll Forward of Credit Losses of Held-to-Maturity Securities Written Down as Other-than-Temporary Impairment Recognized in Earnings and Other Comprehensive Income

	Three months ended June 30,
	2011		2010
Balance, beginning of period	$	12,803	$	12,653
Subsequent OTTI credit losses		47		-
Balance, end of period	$	12,850	$	12,653

(in thousands)

	Six months ended June 30,
	2011		2010
Balance, beginning of period	$	12,778	$	12,364
Subsequent OTTI credit losses		72		289
Balance, end of period	$	12,850	$	12,653

Schedule of Maturities of Investment Securities

	Available For Sale				Held To Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
AMOUNTS MATURING IN:
Three months or less	$	17,296	$	17,379	$	590	$	591
Over three months through twelve months		287,207		294,045		85		85
After one year through five years		1,992,369		2,037,495		613		618
After five years through ten years		750,874		761,393		49		50
After ten years		65,368		65,118		4,216		4,389
Other investment securities		1,959		2,030		-		-
	$	3,115,073	$	3,177,460	$	5,553	$	5,733

Gross Realized Gains and Losses on Sales of Available-for-Sale Securities Table

	Three months ended June 30, 2011				Three months ended June 30, 2010
	Gains		Losses		Gains		Losses
Obligations of states and political subdivisions	$	7	$	-	$	-	$	-
Residential mortgage-backed securities and collateralized mortgage obligations		6,475		804		-		-
	$	6,482	$	804	$	-	$	-
	Six months ended June 30, 2011				Six months ended June 30, 2010
	Gains		Losses		Gains		Losses
Obligations of states and political subdivisions	$	7	$	-	$	2	$	1
Residential mortgage-backed securities and collateralized mortgage obligations		6,475		804		-		-
	$	6,482	$	804	$	2	$	1

Investment Securities Pledged to Secure Borrowings and Public Deposits

	Amortized Cost		Fair Value
To Federal Home Loan Bank to secure borrowings	$	226,584	$	237,852
To state and local governments to secure public deposits		599,429		622,425
Other securities pledged		163,987		165,943
Total pledged securities	$	990,000	$	1,026,220

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Junior Subordinated Debentures

6 Months Ended

Jun. 30, 2011

Junior Subordinated Debentures

Junior Subordinated Debentures

Note 9 – Junior Subordinated Debentures

The following is information about the Company's wholly-owned trusts ("Trusts") as of June 30, 2011:

(dollars in thousands)

Trust Name	Issue Date	Issued and Outstanding Amount		Carrying Value (1)		Rate (2)	Effective Rate (3)			Maturity Date	Redemption Date
AT FAIR VALUE:
Umpqua Statutory Trust II	October 2002	$	20,619	$	13,999	Floating (4)		11.62	%	October 2032	October 2007
Umpqua Statutory Trust III	October 2002		30,928		21,235	Floating (5)		11.62	%	November 2032	November 2007
Umpqua Statutory Trust IV	December 2003		10,310		6,551	Floating (6)		11.64	%	January 2034	January 2009
Umpqua Statutory Trust V	December 2003		10,310		6,540	Floating (6)		11.64	%	March 2034	March 2009
Umpqua Master Trust I	August 2007		41,238		20,733	Floating (7)		11.69	%	September 2037	September 2012
Umpqua Master Trust IB	September 2007		20,619		12,708	Floating (8)		11.65	%	December 2037	December 2012
			134,024		81,766
AT AMORTIZED COST:
HB Capital Trust I	March 2000		5,310		6,357	10.875%		8.20	%	March 2030	March 2010
Humboldt Bancorp Statutory Trust I	February 2001		5,155		5,916	10.200%		8.23	%	February 2031	February 2011
Humboldt Bancorp Statutory Trust II	December 2001		10,310		11,405	Floating (9)		3.00	%	December 2031	December 2006
Humboldt Bancorp Statutory Trust III	September 2003		27,836		30,670	Floating (10)		2.48	%	September 2033	September 2008
CIB Capital Trust	November 2002		10,310		11,241	Floating (5)		3.01	%	November 2032	November 2007
Western Sierra Statutory Trust I	July 2001		6,186		6,186	Floating (11)		3.85	%	July 2031	July 2006
Western Sierra Statutory Trust II	December 2001		10,310		10,310	Floating (9)		3.85	%	December 2031	December 2006
Western Sierra Statutory Trust III	September 2003		10,310		10,310	Floating (12)		3.18	%	September 2033	September 2008
Western Sierra Statutory Trust IV	September 2003		10,310		10,310	Floating (12)		3.18	%	September 2033	September 2008
			96,037		102,705
	Total	$	230,061	$	184,471

(1) Includes purchase accounting adjustments, net of accumulated amortization, for junior subordinated debentures assumed in connection with previous mergers as well as fair value adjustments related to trusts recorded at fair value.

(2) Contractual interest rate of junior subordinated debentures.

(3) Effective interest rate based upon the carrying value as of June 2011.

(4) Rate based on LIBOR plus 3.35%, adjusted quarterly.

(5) Rate based on LIBOR plus 3.45%, adjusted quarterly.

(6) Rate based on LIBOR plus 2.85%, adjusted quarterly.

(7) Rate based on LIBOR plus 1.35%, adjusted quarterly.

(8) Rate based on LIBOR plus 2.75%, adjusted quarterly.

(9) Rate based on LIBOR plus 3.60%, adjusted quarterly.

(10) Rate based on LIBOR plus 2.95%, adjusted quarterly.

(11) Rate based on LIBOR plus 3.58%, adjusted quarterly.

(12) Rate based on LIBOR plus 2.90%, adjusted quarterly.

The Trusts are reflected as junior subordinated debentures in the Condensed Consolidated Balance Sheets. The common stock issued by the Trusts is recorded in other assets in the Condensed Consolidated Balance Sheets, and totaled $6.9 million at June 30, 2011 and December 31, 2010.

On January 1, 2007, the Company selected the fair value measurement option for certain pre-existing junior subordinated debentures (the Umpqua Statutory Trusts). The remaining junior subordinated debentures as of the adoption date were acquired through business combinations and were measured at fair value at the time of acquisition. In 2007, the Company issued two series of trust preferred securities and elected to measure each instrument at fair value. Accounting for the junior subordinated debentures originally issued by the Company at fair value enables us to more closely align our financial performance with the economic value of those liabilities. Additionally, we believe it improves our ability to manage the market and interest rate risks associated with the junior subordinated debentures. The junior subordinated debentures measured at fair value and amortized cost are presented as separate line items on the balance sheet. The ending carrying (fair) value of the junior subordinated debentures measured at fair value represents the estimated amount that would be paid to transfer these liabilities in an orderly transaction amongst market participants under current market conditions as of the measurement date.

The significant inputs utilized in the estimation of fair value of these instruments are the credit risk adjusted spread and three month LIBOR. The credit risk adjusted spread represents the nonperformance risk of the liability, contemplating the inherent risk of the obligation. Generally, an increase in the credit risk adjusted spread and/or a decrease in the three month LIBOR will result in positive fair value adjustments. Conversely, a decrease in the credit risk adjusted spread and/or an increase in the three month LIBOR will result in negative fair value adjustments.

Through the first quarter of 2010 we obtained valuations from a third-party pricing service to assist with the estimation and determination of fair value of these liabilities. In these valuations, the credit risk adjusted interest spread for potential new issuances through the primary market and implied spreads of these instruments when traded as assets on the secondary market, were estimated to be significantly higher than the contractual spread of our junior subordinated debentures measured at fair value. The difference between these spreads has resulted in the cumulative gain in fair value, reducing the carrying value of these instruments as reported on our Condensed Consolidated Balance Sheets. In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") was signed into law which, among other things, limits the ability of certain bank holding companies to treat trust preferred security debt issuances as Tier 1 capital. This law may require many banks to raise new Tier 1 capital and is expected to effectively close the trust-preferred securities markets from offering new issuances in the future. As a result of this legislation, our third-party pricing service noted that they were no longer to able to provide reliable fair value estimates related to these liabilities given the absence of observable or comparable transactions in the market place in recent history or as anticipated into the future.

Due to inactivity in the junior subordinated debenture market and the inability to obtain observable quotes of our, or similar, junior subordinated debenture liabilities or the related trust preferred securities when traded as assets, we utilize an income approach valuation technique to determine the fair value of these liabilities using our estimation of market discount rate assumptions. The Company monitors activity in the trust preferred and related markets, to the extent available, changes related to the current and anticipated future interest rate environment, and considers our entity-specific creditworthiness, to validate the reasonableness of the credit risk adjusted spread and effective yield utilized in our discounted cash flow model. Additionally, the Company utilizes an external valuation firm to validate the reasonableness of the Company's assessment of inputs that ultimately determines the estimated fair value of these liabilities. The Company has determined that the underlying inputs and assumptions have not materially changed since that last available third-party valuation.

Absent changes to the significant inputs utilized in the discounted cash flow model used to measure the fair value of these instruments at each reporting period, the cumulative discount for each junior subordinated debenture will reverse over time, ultimately returning the carrying values of these instruments to their notional values at their expected redemption dates, in a manner similar to the effective yield method as if these instruments were accounted for under the amortized cost method. This will result in recognizing losses on junior subordinated debentures carried at fair value on a quarterly basis within non-interest income. For the three and six months ended June 30, 2011 and 2010, we recorded a loss of $547,000 and $1.1 million and no gain and a gain of $6.1 million, respectively, resulting from the change in fair value of the junior subordinated debentures recorded at fair value. Observable activity in the junior subordinated debenture and related markets in future periods may change the effective rate used to discount these liabilities, and could result in additional fair value adjustments (gains or losses on junior subordinated debentures measured at fair value) outside the expected periodic change in fair value had the fair value assumptions remained unchanged.

As noted above, the Dodd-Frank Act limits the ability of certain bank holding companies to treat trust preferred security debt issuances as Tier 1 capital. As the Company had less than $15 billion in assets at December 31, 2009, under the Dodd-Frank Act, the Company will be able to continue to include its existing trust preferred securities, less the common stock of the Trusts, in Tier 1 capital. At June 30, 2011, the Company's restricted core capital elements were 18% of total core capital, net of goodwill and any associated deferred tax liability.

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Allowance for Non-Covered Loan Loss and Credit Quality (Activity in the Non-Covered Allowance for Loan and Lease Losses) (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Balance, beginning of period, Allowance	$ 97,833	$ 110,784	$ 101,921	$ 107,657
Charge-offs	(18,611)	(31,554)	(39,486)	(71,313)
Recoveries	3,114	4,917	4,871	5,697
Provision	15,459	29,767	30,489	71,873
Balance, end of period, Allowance	97,795	113,914	97,795	113,914
Collectively evaluated for impairment, Allowance	92,134	106,590	92,134	106,590
Individually evaluated for impairment, Allowance	5,661	7,324	5,661	7,324
Collectively evaluated for impairment, Non-covered loans and leases	5,550,676	5,486,508	5,550,676	5,486,508
Individually evaluated for impairment, Non-covered loans and leases	196,563	251,170	196,563	251,170
Ending balance, Non-covered loans and leases	5,747,239	5,737,678	5,747,239	5,737,678
Deferred loan fees	11,686		11,686		11,031
Commercial [Member]
Balance, beginning of period, Allowance	20,798	20,890	22,146	24,583
Charge-offs	(3,179)	(9,961)	(11,355)	(32,865)
Recoveries	695	370	1,091	649
Provision	5,436	8,548	11,868	27,480
Balance, end of period, Allowance	23,750	19,847	23,750	19,847
Collectively evaluated for impairment, Allowance	20,812	19,836	20,812	19,836
Individually evaluated for impairment, Allowance	2,938	11	2,938	11
Collectively evaluated for impairment, Non-covered loans and leases	1,330,749	1,203,558	1,330,749	1,203,558
Individually evaluated for impairment, Non-covered loans and leases	29,921	52,295	29,921	52,295
Ending balance, Non-covered loans and leases	1,360,670	1,255,853	1,360,670	1,255,853
Consumer & Other [Member]
Balance, beginning of period, Allowance	856	863	803	455
Charge-offs	(354)	(787)	(888)	(1,076)
Recoveries	111	185	206	282
Provision	255	587	747	1,187
Balance, end of period, Allowance	868	848	868	848
Collectively evaluated for impairment, Allowance	868	848	868	848
Collectively evaluated for impairment, Non-covered loans and leases	34,584	34,215	34,584	34,215
Ending balance, Non-covered loans and leases	34,584	34,215	34,584	34,215
Commercial Real Estate [Member]
Balance, beginning of period, Allowance	63,528	70,460	64,405	67,281
Charge-offs	(12,883)	(19,605)	(24,314)	(35,535)
Recoveries	2,208	4,312	3,453	4,596
Provision	9,129	13,048	18,438	31,873
Balance, end of period, Allowance	61,982	68,215	61,982	68,215
Collectively evaluated for impairment, Allowance	59,277	61,127	59,277	61,127
Individually evaluated for impairment, Allowance	2,705	7,088	2,705	7,088
Collectively evaluated for impairment, Non-covered loans and leases	3,663,034	3,783,102	3,663,034	3,783,102
Individually evaluated for impairment, Non-covered loans and leases	166,464	194,373	166,464	194,373
Ending balance, Non-covered loans and leases	3,829,498	3,977,475	3,829,498	3,977,475
Residential [Member]
Balance, beginning of period, Allowance	5,626	8,235	5,926	5,811
Charge-offs	(2,195)	(1,201)	(2,929)	(1,837)
Recoveries	100	50	121	170
Provision	1,623	2,689	2,036	5,629
Balance, end of period, Allowance	5,154	9,773	5,154	9,773
Collectively evaluated for impairment, Allowance	5,136	9,548	5,136	9,548
Individually evaluated for impairment, Allowance	18	225	18	225
Collectively evaluated for impairment, Non-covered loans and leases	522,309	465,633	522,309	465,633
Individually evaluated for impairment, Non-covered loans and leases	178	4,502	178	4,502
Ending balance, Non-covered loans and leases	522,487	470,135	522,487	470,135
Unallocated [Member]
Balance, beginning of period, Allowance	7,025	10,336	8,641	9,527
Provision	(984)	4,895	(2,600)	5,704
Balance, end of period, Allowance	6,041	15,231	6,041	15,231
Collectively evaluated for impairment, Allowance	$ 6,041	$ 15,231	$ 6,041	$ 15,231

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Derivatives (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Counterparty default losses on forward contracts	$ 0	$ 0	$ 0	$ 0
Commitments to originate loans held for sale	67,600,000		67,600,000
Commitments and contingent liabilities
Changes in fair value of interest rate swap	85,000
Notional Amount of Credit Risk Derivatives	86,300,000		86,300,000
Number of Interest Rate Derivatives Held	12		12
Termination Value Of Derivatives In Net Liability Position	1,400,000		1,400,000
Minimum Collateral Posting Agreement Amount	1,300,000		1,300,000
Forward Sales Commitments [Member]
Commitments and contingent liabilities	$ 106,000,000		$ 106,000,000

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Mortgage Servicing Rights (Schedule of Information Relates to Serviced Loan Portfolio) (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Mortgage Servicing Rights
Balance of loans serviced for others	$ 1,751,700,000		$ 1,751,700,000		$ 1,603,414,000
MSR as a percentage of serviced loans			0.93%		0.90%
Contractually specified servicing fees, late fees and ancillary fees earned	$ 1,100,000	$ 933,000	$ 2,300,000	$ 1,800,000

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Earnings Per Common Share (Computation of Basic and Diluted Earnings (Loss) Per Common Share) (Details) (USD $) In Thousands, except Per Share data	3 Months Ended				6 Months Ended				12 Months Ended
	Jun. 30, 2011		Jun. 30, 2010		Jun. 30, 2011		Jun. 30, 2010		Dec. 31, 2010
Earnings Per Common Share
Net income	$ 17,785		$ 3,463		$ 31,252		$ 11,977		$ 28,326
Preferred stock dividends							12,192		3,686
Dividends and undistributed earnings allocated to participating securities	86	[1]	16	[1]	148	[1]	31	[1]
Net earnings (loss) available to common shareholders	$ 17,699		$ 3,447		$ 31,104		$ (246)
Weighted average number of common shares outstanding - basic	114,611		110,135		114,593		101,205
Effect of potentially dilutive common shares	174	[2]	220	[2]	203	[2]	230	[2]
Preferred convertible stock			4,378
Weighted average number of common shares outstanding - diluted	114,785		114,733		114,796		101,435
Basic	$ 0.15		$ 0.03		$ 0.27
Diluted	$ 0.15		$ 0.03		$ 0.27

[1] Represents dividends paid and undistributed earnings allocated to nonvested restricted stock awards.

[2] Represents the effect of the assumed exercise of warrants, assumed exercise of stock options, vesting of non-participating restricted shares, and vesting of restricted stock units, based on the treasury stock method.

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Allowance for Non-Covered Loan Loss and Credit Quality (Schedule of Average Recorded Investment and Interest Income Recognized) (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Average Recorded Investment	$ 200,093	$ 266,325	$ 219,969	$ 286,898
Interest Income Recognized	831	804	1,458	1,542
Commercial [Member] | LOC & Other [Member] | With No Related Allowance Recorded [Member]
Average Recorded Investment	17,978	42,009	24,724	46,905
Commercial [Member] | Term [Member] | With No Related Allowance Recorded [Member]
Average Recorded Investment	8,307	10,768	8,678	10,673
Commercial Real Estate [Member] | Residential Development [Member] | With No Related Allowance Recorded [Member]
Average Recorded Investment	37,841	31,695	37,762	39,438
Commercial Real Estate [Member] | Construction & Development [Member] | With No Related Allowance Recorded [Member]
Average Recorded Investment	21,063	24,668	23,238	28,665
Commercial Real Estate [Member] | Term & Multifamily [Member] | With No Related Allowance Recorded [Member]
Average Recorded Investment	54,086	57,851	54,725	60,241
Residential [Member] | With No Related Allowance Recorded [Member] | Mortgage [Member]
Average Recorded Investment
Interest Income Recognized
Residential [Member] | With No Related Allowance Recorded [Member] | Home Equity Loans & Lines [Member]
Average Recorded Investment
Interest Income Recognized
Residential [Member] | With No Related Allowance Recorded [Member] | Consumer & Other [Member]
Average Recorded Investment
Interest Income Recognized
Commercial [Member] | LOC & Other [Member] | With an Allowance Recorded [Member]
Average Recorded Investment	2,857		2,532	200
Interest Income Recognized		4		8
Commercial [Member] | Term [Member] | With an Allowance Recorded [Member]
Average Recorded Investment	202	225	268	296
Interest Income Recognized	11	12	23	24
Commercial Real Estate [Member] | Residential Development [Member] | With an Allowance Recorded [Member]
Average Recorded Investment	32,943	60,605	40,165	60,053
Interest Income Recognized	320	506	670	937
Commercial Real Estate [Member] | Construction & Development [Member] | With an Allowance Recorded [Member]
Average Recorded Investment	8,905	4,264	6,506	2,843
Interest Income Recognized	266		338
Commercial Real Estate [Member] | Term & Multifamily [Member] | With an Allowance Recorded [Member]
Average Recorded Investment	15,733	29,731	19,995	32,856
Interest Income Recognized	233	220	424	451
Residential [Member] | Mortgage [Member] | With an Allowance Recorded [Member]
Average Recorded Investment	178	4,474	1,369	4,705
Interest Income Recognized	1	62	3	121
Residential [Member] | Home Equity Loans & Lines [Member] | With an Allowance Recorded [Member]
Average Recorded Investment		35	7	23
Interest Income Recognized				1
Residential [Member] | Consumer & Other [Member] | With an Allowance Recorded [Member]
Average Recorded Investment
Interest Income Recognized
Commercial [Member]
Average Recorded Investment	29,344	53,002	36,202	58,074
Interest Income Recognized	11	16	23	32
Consumer & Other [Member]
Average Recorded Investment
Interest Income Recognized
Commercial Real Estate [Member]
Average Recorded Investment	170,571	208,814	182,391	224,096
Interest Income Recognized	819	726	1,432	1,388
Residential [Member]
Average Recorded Investment	178	4,509	1,376	4,728
Interest Income Recognized	$ 1	$ 62	$ 3	$ 122

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Business Combinations

6 Months Ended

Jun. 30, 2011

Business Combinations

Business Combinations

Note 2 – Business Combinations

On January 22, 2010, the Washington Department of Financial Institutions closed EvergreenBank ("Evergreen"), Seattle, Washington and appointed the Federal Deposit Insurance Corporation ("FDIC") as receiver. That same date, Umpqua Bank assumed the banking operations of Evergreen from the FDIC under a whole bank purchase and assumption agreement with loss-sharing. Under the terms of the loss-sharing agreement, the FDIC will cover a substantial portion of any future losses on loans, related unfunded loan commitments, other real estate owned ("OREO") and accrued interest on loans for up to 90 days. The FDIC will absorb 80% of losses and share in 80% of loss recoveries on the first $90.0 million on covered assets for Evergreen and absorb 95% of losses and share in 95% of loss recoveries exceeding $90.0 million, except the Bank will incur losses up to $30.2 million before the loss-sharing commences. The loss-sharing arrangements for non-single family residential and single family residential loans are in effect for 5 years and 10 years, respectively, and the loss recovery provisions are in effect for 8 years and 10 years, respectively, from the acquisition date. With this agreement, Umpqua Bank assumed six additional store locations in the greater Seattle, Washington market. This acquisition is consistent with our community banking expansion strategy and provides further opportunity to fill in our market presence in the greater Seattle, Washington market.

On February 26, 2010, the Washington Department of Financial Institutions closed Rainier Pacific Bank ("Rainier"), Tacoma, Washington and appointed the FDIC as receiver. That same date, Umpqua Bank assumed the banking operations of Rainier from the FDIC under a whole bank purchase and assumption agreement with loss-sharing. Under the terms of the loss-sharing agreement, the FDIC will cover a substantial portion of any future losses on loans, related unfunded loan commitments, OREO and accrued interest on loans for up to 90 days. The FDIC will absorb 80% of losses and share in 80% of loss recoveries on the first $95.0 million of losses on covered assets and absorb 95% of losses and share in 95% of loss recoveries exceeding $95.0 million. The loss-sharing arrangements for non-single family residential and single family residential loans are in effect for 5 years and 10 years, respectively, and the loss recovery provisions are in effect for 8 years and 10 years, respectively, from the acquisition dates. With this agreement, Umpqua Bank assumed 14 additional store locations in Pierce County and surrounding areas. This acquisition expands our presence in the south Puget Sound region of Washington State.

The operations of Evergreen and Rainier are included in our operating results from January 23, 2010 and February 27, 2010, respectively, and added combined revenue of $9.8 million and $24.5 million, non-interest expense of $4.8 million and $9.4 million, and earnings of $1.4 million and $5.4 million, net of tax, for the three and six months ended June 30, 2011, and added combined revenue of $10.4 million and $22.8 million, non-interest expense of $6.6 million and $11.3 million, and earnings of $2.5 million and $7.6 million, net of tax, for the three and six months ended June 30, 2010, respectively. These operating results include a bargain purchase gain of $6.4 million, which is not indicative of future operating results. Evergreen's and Rainiers's results of operations prior to the acquisition are not included in our operating results. Merger-related expenses of $52,000 and $102,000 for the three and six months ended June 30, 2011, respectively, and $1.6 million and $3.3 million for the three and six months ended June 30, 2010, respectively, have been incurred in connection with these acquisitions and recognized in a separate line item on the Condensed Consolidated Statements of Operations.

On June 18, 2010, the Nevada State Financial Institutions Division closed Nevada Security Bank ("Nevada Security"), Reno, Nevada and appointed the FDIC as receiver. That same date, Umpqua Bank assumed the banking operations of Nevada Security from the FDIC under a whole bank purchase and assumption agreement with loss-sharing. Under the terms of the loss-sharing agreement, the FDIC will cover a substantial portion of any future losses on loans, related unfunded loan commitments, OREO, and accrued interest on loans for up to 90 days. The FDIC will absorb 80% of losses and share in 80% of loss recoveries on all covered assets. The loss-sharing arrangements for non-single family residential and single family residential loans are in effect for 5 years and 10 years, respectively, and the loss recovery provisions are in effect for 8 years and 10 years, respectively, from the acquisition dates. With this agreement, Umpqua Bank assumed five additional store locations, including three in Reno, Nevada, one in Incline Village, Nevada, and one in Roseville, California. This acquisition expands our presence into the State of Nevada.

The operations of Nevada Security are included in our operating results from June 19, 2010, and added revenue of $2.8 million and $9.4 million, non-interest expense of $2.6 million and $6.1 million, and loss of $532,000 and $627,000, net of tax, for the three and six months ended, June 30, 2011 and revenue of $529,000, non-interest expense of $582,000, and loss of $34,000, net of tax, for the three and six months ended, June 30, 2010, respectively. Nevada Security's results of operations prior to the acquisition are not included in our operating results. Merger-related expenses of $12,000 and $23,000 for the three and six months ended June 30, 2011, respectively, and $402,000 for the three and six months ended June 30, 2010, respectively, have been incurred in connection with the acquisition of Nevada Security and recognized as a separate line item on the Condensed Consolidated Statements of Operations.

We refer to the acquired loans and other real estate owned that are subject to the loss-sharing agreements as "covered loans" and "covered other real estate owned", respectively, and these are presented as separate line items in our consolidated balance sheet. Collectively these balances are referred to as "covered assets." Certain types of modifications or restructuring activities subsequent to acquisition may disqualify a loan from loss-share coverage under the provisions of the loss-share agreement. Loans that have been disqualified from loss-share coverage are prospectively reported as non-covered loans.

The assets acquired and liabilities assumed from the Evergreen, Rainier, and Nevada Security acquisitions have been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the acquisition dates. The fair values of the assets acquired and liabilities assumed were determined based on the requirements of the Fair Value Measurements and Disclosures topic of the Financial Accounting Standards Board Accounting Standards Codification (the "FASB ASC"). The amounts are subject to adjustments based upon final settlement with the FDIC. In addition, the tax treatment of FDIC-assisted acquisitions is complex and subject to interpretations that may result in future adjustments of deferred taxes as of the acquisition date. The terms of the agreements provide for the FDIC to indemnify the Bank against claims with respect to liabilities of Evergreen, Rainier, and Nevada Security not assumed by the Bank and certain other types of claims identified in the agreement. The application of the acquisition method of accounting resulted in the recognition of a bargain purchase gain of $6.4 million in the Evergreen acquisition, $35.8 million of goodwill in the Rainier acquisition and $10.4 million of goodwill in the Nevada Security acquisition.

A summary of the net assets (liabilities) received from the FDIC and the estimated fair value adjustments are presented below:

(in thousands)

	Evergreen		Rainier		Nevada Security
	January 22, 2010		February 26, 2010		June 18, 2010
Cost basis net assets (liabilities)	$	58,811	$	(50,295)	$	53,629
Cash payment received from (paid to) the FDIC		-		59,351		(29,950)
Fair value adjustments:
Loans		(117,449)		(103,137)		(112,975)
Other real estate owned		(2,422)		(6,581)		(17,939)
Other intangible assets		440		6,253		322
FDIC indemnification asset		71,755		76,603		99,160
Deposits		(1,023)		(1,828)		(1,950)
Term debt		(2,496)		(13,035)		-
Other		(1,179)		(3,139)		(690)
Bargain purchase gain (goodwill)	$	6,437	$	(35,808)	$	(10,393)

In FDIC-assisted transactions, only certain assets and liabilities are transferred to the acquirer and, depending on the nature and amount of the acquirer's bid, the FDIC may be required to make a cash payment to the acquirer or the acquirer may be required to make payment to the FDIC.

In the Evergreen acquisition, cost basis net assets of $58.8 million were transferred to the Company. The bargain purchase gain represents the excess of the estimated fair value of the assets acquired over the estimated fair value of the liabilities assumed.

In the Rainier acquisition, cost basis net liabilities of $50.3 million and a cash payment received from the FDIC of $59.4 million were transferred to the Company. The goodwill represents the excess of the estimated fair value of the liabilities assumed over the estimated fair value of the assets acquired. Goodwill of $27.5 million and core deposit intangible assets of $1.1 million recognized are deductible for income tax purposes.

In the Nevada Security acquisition, cost basis net assets of $53.6 million were transferred to the Company and a cash payment of $30.0 million was made to the FDIC. The goodwill represents the excess of the estimated fair value of the liabilities assumed over the estimated fair value of the assets acquired. Goodwill of $36.5 million and core deposit intangible assets of $322,000 recognized are deductible for income tax purposes.

The Bank did not immediately acquire all the real estate, banking facilities, furniture or equipment of Evergreen, Rainier, or Nevada Security as part of the purchase and assumption agreements. Rather, the Bank was granted the option to purchase or lease the real estate and furniture and equipment from the FDIC. The term of this option expired 90 days from the acquisition dates, unless extended by the FDIC. Acquisition costs of the real estate and furniture and equipment are based on current mutually agreed upon appraisals. Umpqua exercised the right to purchase approximately $344,000 of furniture and equipment for Evergreen, $26.3 million of real estate and furniture and equipment for Rainier, and $2.0 million of real estate and furniture and equipment for Nevada Security. The Bank had the option to purchase one store location as part of the Nevada Security acquisition and purchased it in the second quarter of 2011.

The statement of assets acquired and liabilities assumed at their estimated fair values of Evergreen, Rainier, and Nevada Security are presented below:

(in thousands)

	Evergreen		Rainier		Nevada Security
	January 22, 2010		February 26, 2010		June 18, 2010
Assets Acquired:
Cash and equivalents	$	18,919	$	94,067	$	66,060
Investment securities		3,850		26,478		22,626
Covered loans		252,493		458,340		215,507
Premises and equipment		-		17		50
Restricted equity securities		3,073		13,712		2,951
Goodwill		-		35,808		10,393
Other intangible assets		440		6,253		322
Mortgage servicing rights		-		62		-
Covered other real estate owned		2,421		6,580		17,938
FDIC indemnification asset		71,755		76,603		99,160
Other assets		328		3,254		2,588
Total assets acquired	$	353,279	$	721,174	$	437,595
Liabilities Assumed:
Deposits	$	285,775	$	425,771	$	437,299
Term debt		60,813		293,191		-
Other liabilities		254		2,212		296
Total liabilities assumed		346,842		721,174		437,595
Net assets acquired/bargain purchase gain	$	6,437	$	-	$	-

Rainier's assets and liabilities were significant at a level to require disclosure of one year of historical financial statements and related pro forma financial disclosure. However, given the pervasive nature of the loss-sharing agreement entered into with the FDIC, the historical information of Rainier is much less relevant for purposes of assessing the future operations of the combined entity. In addition, prior to closure Rainier had not completed an audit of their financial statements, and we determined that audited financial statements were not and would not be reasonably available for the year ended December 31, 2009. Given these considerations, the Company requested, and received, relief from the Securities and Exchange Commission from submitting certain financial information of Rainier. The assets and liabilities of Evergreen and Nevada Security were not at a level that requires disclosure of historical or pro forma financial information.

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Shareholders' Equity (Schedule of Weighted Average Assumptions for Stock Options Granted) (Details) (USD $)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Shareholders' Equity
Dividend yield	2.79%	2.73%
Expected life (years)	7.1	7.1
Expected volatility	52.00%	52.00%
Risk-free rate	2.71%	3.04%
Weighted average fair value of options on date of grant	$ 4.65	$ 5.18

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Shareholders' Equity

6 Months Ended

Jun. 30, 2011

Shareholders' Equity

Shareholders' Equity

Note 12 – Shareholders' Equity

On February 3, 2010, the Company raised $303.6 million through a public offering by issuing 8,625,000 shares of the Company's common stock, including 1,125,000 shares pursuant to the underwriters' over-allotment option, at a share price of $11.00 per share and 18,975,000 depository shares, including 2,475,000 depository shares pursuant to the underwriter's over-allotment option, also at a price of $11.00 per share. Fractional interests (1/100th) in each share of the Series B Common Stock Equivalent were represented by the 18,975,000 depositary shares; as a result, each depositary share would convert into one share of common stock. The net proceeds to the Company after deducting underwriting discounts and commissions and offering expenses were $288.1 million. The net proceeds from the offering were used to redeem the preferred stock issued to the United States Department of the Treasury (U.S. Treasury) under the Troubled Asset Relief Program ("TARP") Capital Purchase Program ("CPP"), to fund FDIC-assisted acquisition opportunities and for general corporate purposes.

On February 17, 2010, the Company redeemed all of the outstanding Fixed Rate Cumulative Perpetual Preferred Stock, Series A, issued to the U.S. Treasury under the TARP CPP for an aggregate purchase price of $214.2 million. As a result of the repurchase of the Series A preferred stock, the Company incurred a one-time deemed dividend of $9.7 million due to the accelerated amortization of the remaining issuance discount on the preferred stock.

On March 31, 2010, the Company repurchased the common stock warrant issued to the U.S. Treasury pursuant to the TARP CPP, for $4.5 million. The warrant repurchase, together with the Company's redemption in February 2010 of the entire amount of Fixed Rate Cumulative Perpetual Preferred Stock, Series A, issued to the U.S. Treasury, represents full repayment of all TARP obligations and cancellation of all equity interests in the Company held by the U.S. Treasury.

On April 20, 2010, shareholders of the Company approved an amendment to the Company's Restated Articles of Incorporation. The amendment, which became effective on April 21, 2010, increased the number of authorized shares of common stock to 200,000,000 (from 100,000,000). As a result of the effectiveness of the amendment, as of the close of business on April 21, 2010, the Company's Series B Common Stock Equivalent preferred stock automatically converted into newly issued shares of common stock at a conversion rate of 100 shares of common stock for each share of Series B Common Stock Equivalent preferred stock. All shares of Series B Common Stock Equivalent preferred stock and representative depositary shares ceased to exist upon the conversion. Trading in the depositary shares on NASDAQ (ticker symbol "UMPQP") ceased and the UMPQP symbol voluntarily delisted effective as of the close of business on April 21, 2010.

Stock-Based Compensation

The compensation cost related to stock options, restricted stock and restricted stock units (included in salaries and employee benefits) was $868,000 and $2.0 million for the three and six months ended June 30, 2011, respectively, as compared to $799,000 and $1.4 million for the three and six months ended June 30, 2010, respectively. The total income tax benefit recognized related to stock-based compensation was $347,000 and $795,000 for the three and six months ended June 30, 2011, respectively, as compared to $320,000 and $570,000 for the comparable periods in 2010, respectively.

On June 17, 2011, the Company's Compensation Committee modified restricted stock awards and option grants that were issued to fourteen executive officers on January 31, 2011, as follows:

• Added performance vesting conditions linking total shareholder return, compared to the return of a regional bank stock total return index;

• Awards will cliff vest after three years instead of time vest over a four year period, but only to the extent that the performance conditions are met; and

• The modified grants will vest in whole or in part only if total shareholder return achieves specified targets, subject to prorated vesting upon death, disability, qualifying retirement, termination for good reason or a change of control.

As a result of the modification, there was no incremental compensation cost.

The following table summarizes information about stock option activity for the six months ended June 30, 2011:

(in thousands, except per share data)

	Six months ended June 30, 2011
	Options       Outstanding		Weighted-Avg     Exercise Price		Weighted-Avg   Remaining Contractual   Term (Years)		Aggregate     Intrinsic Value
Balance, beginning of period		2,067	$	14.82
Granted		237	$	11.01
Exercised		(40)	$	7.67
Forfeited/expired		(87)	$	15.62
Balance, end of period		2,177	$	14.50		6.00	$	1,692
Options exercisable, end of period		1,284	$	16.36		4.22	$	1,288

The total intrinsic value (which is the amount by which the stock price exceeded the exercise price on the date of exercise) of options exercised during the three and six months ended June 30, 2011 was $32,000 and $147,000, respectively. This compared to the total intrinsic value of options exercised during the three and six months ended June 30, 2010 of $93,000 and $382,000, respectively. During the three and six months ended June 30, 2011, the amount of cash received from the exercise of stock options was $97,000 and $309,000, respectively, as compared to $153,000 and $917,000 for the same periods in 2010, respectively.

The fair value of each option grant is estimated as of the grant date using the Black-Scholes option-pricing model. The following weighted average assumptions were used for stock options granted in the six months ended June 30, 2011 and 2010:

	Six months ended              June 30,
	2011		2010
Dividend yield		2.79%		2.73%
Expected life (years)		7.1		7.1
Expected volatility		52%		52%
Risk-free rate		2.71%		3.04%
Weighted average fair value of options on date of grant	$	4.65	$	5.18

The Company grants restricted stock periodically as a part of the 2003 Stock Incentive Plan for the benefit of employees. Restricted shares issued generally vest on an annual basis over five years. A deferred restricted stock award was granted to an executive in the second quarter of 2007. That award is now fully vested. The Company will issue certificates for the vested award within the seventh month following termination of the executive's employment. The following table summarizes information about nonvested restricted share activity for the six months ended June 30, 2011:

(in thousands, except per share data)

	Six months ended June 30, 2011
	Restricted Shares         Outstanding		Weighted Average  Grant         Date Fair Value
Balance, beginning of period		401	$	15.29
Granted		279	$	11.02
Released		(68)	$	18.57
Forfeited/expired		(13)	$	13.31
Balance, end of period		599	$	12.98

The total fair value of restricted shares vested and released during the three and six months ended June 30, 2011 was $114,000 and $765,000, respectively. This compares to the total fair value of restricted shares vested and released during the three and six months ended June 30, 2010 of $51,000 and $538,000, respectively.

The Company grants restricted stock units as a part of the 2007 Long Term Incentive Plan for the benefit of certain executive officers. Restricted stock unit grants are subject to performance-based vesting as well as other approved vesting conditions. The total number of restricted stock units granted represents the maximum number of restricted stock units eligible to vest based upon the performance and service conditions set forth in the grant agreements. The following table summarizes information about restricted stock unit activity for the six months ended June 30, 2011:

(in thousands, except per share data)

	Six months ended June 30, 2011
	Restricted Stock Units         Outstanding		Weighted Average  Grant         Date Fair Value
Balance, beginning of period		225	$	11.13
Granted		105	$	10.42
Released		(63)	$	14.33
Forfeited/expired		(48)	$	14.33
Balance, end of period		219	$	9.17

No restricted stock units were vested and released during the three months ended June 30, 2010. The total fair value of restricted stock units vested and released during the six months ended June 30, 2011 was $677,000. This compares to the total fair value of restricted stock units vested and released during the three and six months ended June 30, 2010 of none and $213,000, respectively.

As of June 30, 2011, there was $3.2 million of total unrecognized compensation cost related to nonvested stock options which is expected to be recognized over a weighted-average period of 2.9 years. As of June 30, 2011, there was $4.6 million of total unrecognized compensation cost related to nonvested restricted stock which is expected to be recognized over a weighted-average period of 3.0 years. As of June 30, 2011, there was $1.0 million of total unrecognized compensation cost related to nonvested restricted stock units which is expected to be recognized over a weighted-average period of 1.6 years, assuming expected performance conditions are met.

For the three and six months ended June 30, 2011, the Company received income tax benefits of $58,000 and $633,000, respectively, related to the exercise of non-qualified employee stock options, disqualifying dispositions on the exercise of incentive stock options, the vesting of restricted shares and the vesting of restricted stock units. For the three and six months ended June 30, 2010, the Company received income tax benefits of $54,000 and $380,000, respectively. In the six months ended June 30, 2011, the Company had net tax deficiencies (tax deficiency resulting from tax deductions less than the compensation cost recognized) of $251,000, compared to net tax deficiencies of $205,000 for the six months ended June 30, 2010. Only cash flows from gross excess tax benefits are classified as financing cash flows.

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Covered Assets and FDIC Indemnification Asset (Estimated Fair Value of Acquired Loans) (Details) (USD $)	Jun. 30, 2011	Dec. 31, 2010	Jan. 22, 2010 Evergreen Bank [Member] Estimated Fair Value [Member]	Feb. 26, 2010 Rainier Pacific Bank [Member] Estimated Fair Value [Member]	Jun. 18, 2010 Nevada Security Bank [Member] Estimated Fair Value [Member]	Jun. 30, 2011 Estimated Fair Value [Member]
Commercial real estate, Term & multifamily	$ 3,532,134,000	$ 3,483,475,000	$ 141,076,000.000	$ 331,869,000.000	$ 154,119,000.000	$ 627,064,000.000
Commercial real estate, Construction & development	184,707,000	247,814,000	18,832,000.000	562,000.000	9,481,000.000	28,875,000.000
Commercial real estate, Residential development	112,657,000	147,813,000	16,219,000.000	10,340,000.000	15,641,000.000	42,200,000.000
Commercial, Term	572,402,000	509,453,000	27,272,000.000	14,850,000.000	18,257,000.000	60,379,000.000
Commercial, LOC & other	788,268,000	747,419,000	23,965,000.000	18,169,000.000	11,408,000.000	53,542,000.000
Residential, Mortgage	245,034,000	222,416,000	11,886,000.000	39,897,000.000	1,539,000.000	53,322,000.000
Residential, Home equity loans & lines	277,453,000	278,585,000	8,308,000.000	31,029,000.000	4,421,000.000	43,758,000.000
Consumer & other	34,584,000	33,043,000	4,935,000.000	11,624,000.000	641,000.000	17,200,000.000
Total	$ 5,747,239,000	$ 5,670,018,000	$ 252,493,000.000	$ 458,340,000.000	$ 215,507,000.000	$ 926,340,000.000

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Covered Assets and FDIC Indemnification Asset (Narrative) (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011 Evergreen Bank [Member]	Dec. 31, 2010 Evergreen Bank [Member]	Jun. 30, 2011 Rainier Pacific Bank [Member]	Dec. 31, 2010 Rainier Pacific Bank [Member]	Jun. 30, 2011 Nevada Security Bank [Member]	Dec. 31, 2010 Nevada Security Bank [Member]
Range of risk rating for loans and leases, minimum		1
Range of risk rating for loans and leases, maximum		10
Allowance on covered loans			$ 0
Recaptured Provision On Covered Loans	1,000,000	1,100,000
Allowance on covered loans			0
Outstanding unpaid principal of covered loans				$ 242,100,000	$ 286,600,000	$ 447,500,000	$ 481,700,000	$ 283,200,000	$ 295,400,000

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2011

Earnings Per Common Share

Computation of Basic and Diluted Earnings (Loss) Per Common Share

(in thousands, except per share data)

	Three months ended     June  30,				Six months ended     June 30,
	2011		2010		2011		2010
NUMERATORS:
Net income	$	17,785	$	3,463	$	31,252	$	11,977
Less:
Preferred stock dividends		-		-		-		12,192
Dividends and undistributed earnings allocated to participating securities (1)		86		16		148		31
Net earnings (loss) available to common shareholders	$	17,699	$	3,447	$	31,104	$	(246)
DENOMINATORS:
Weighted average number of common shares outstanding - basic		114,611		110,135		114,593		101,205
Effect of potentially dilutive common shares (2)		174		220		203		230
Preferred convertible stock		-		4,378		-		-
Weighted average number of common shares outstanding - diluted		114,785		114,733		114,796		101,435
EARNINGS (LOSS) PER COMMON SHARE:
Basic	$	0.15	$	0.03	$	0.27	$	-
Diluted	$	0.15	$	0.03	$	0.27	$	-

(1) Represents dividends paid and undistributed earnings allocated to nonvested restricted stock awards.

(2) Represents the effect of the assumed exercise of warrants, assumed exercise of stock options, vesting of non-participating restricted shares, and vesting of restricted stock units, based on the treasury stock method.

Schedule of Weighted Average Outstanding Securities Not Included in the Computation of Diluted Earnings Per Common Share

	Three months ended     June  30,				Six months ended     June 30,
	2011		2010		2011		2010
Stock options		1,859		1,287		1,833		1,233
CPP warrant		-		-		-		552
Non-participating, nonvested restricted shares		-		10		-		11
Restricted stock units		-		-		-		-
		1,859		1,297		1,833		1,796

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Covered Assets and FDIC Indemnification Asset (Internal Risk Rating by Loan Class) (Details) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Commercial real estate, Term & multifamily	$ 3,532,134,000	$ 3,483,475,000
Commercial real estate, Construction & development	184,707,000	247,814,000
Commercial real estate, Residential development	112,657,000	147,813,000
Commercial, Term	572,402,000	509,453,000
Commercial, LOC & other	788,268,000	747,419,000
Residential, Mortgage	245,034,000	222,416,000
Residential, Home equity loans & lines	277,453,000	278,585,000
Consumer & other	34,584,000	33,043,000
Total	5,747,239,000	5,670,018,000
Covered Loans [Member]
Commercial real estate, Term & multifamily	515,949,000.000	569,642,000.000
Commercial real estate, Construction & development	19,818,000.000	22,435,000.000
Commercial real estate, Residential development	15,947,000.000	24,706,000.000
Commercial, Term	37,251,000.000	42,600,000.000
Commercial, LOC & other	28,480,000.000	35,227,000.000
Residential, Mortgage	41,068,000.000	44,824,000.000
Residential, Home equity loans & lines	31,454,000.000	35,625,000.000
Consumer & other	8,709,000.000	10,839,000.000
Total	698,676,000.000	785,898,000.000
Covered Loans [Member] | Pass/Watch [Member]
Commercial real estate, Term & multifamily	419,493,000.000	485,238,000.000
Commercial real estate, Construction & development	3,060,000.000	6,155,000.000
Commercial real estate, Residential development	1,646,000.000	6,625,000.000
Commercial, Term	24,285,000.000	31,760,000.000
Commercial, LOC & other	19,506,000.000	22,960,000.000
Residential, Mortgage	41,051,000.000	44,524,000.000
Residential, Home equity loans & lines	31,393,000.000	34,998,000.000
Consumer & other	8,709,000.000	10,827,000.000
Total	549,143,000.000	643,087,000.000
Covered Loans [Member] | Special Mention [Member]
Commercial real estate, Term & multifamily	38,176,000.000	32,150,000.000
Commercial real estate, Construction & development	2,919,000.000	3,799,000.000
Commercial real estate, Residential development		1,322,000.000
Commercial, Term	1,970,000.000	2,119,000.000
Commercial, LOC & other	1,953,000.000	4,246,000.000
Total	45,018,000.000	43,636,000.000
Covered Loans [Member] | Substandard [Member]
Commercial real estate, Term & multifamily	47,689,000.000	44,833,000.000
Commercial real estate, Construction & development	8,489,000.000	7,640,000.000
Commercial real estate, Residential development	9,012,000.000	12,907,000.000
Commercial, Term	8,385,000.000	7,087,000.000
Commercial, LOC & other	6,720,000.000	7,183,000.000
Residential, Mortgage	17,000.000	300,000.000
Residential, Home equity loans & lines	61,000.000	627,000.000
Consumer & other		12,000.000
Total	80,373,000.000	80,589,000.000
Covered Loans [Member] | Doubtful/Loss [Member]
Commercial real estate, Term & multifamily	10,591,000.000	7,421,000.000
Commercial real estate, Construction & development	5,350,000.000	4,841,000.000
Commercial real estate, Residential development	5,289,000.000	3,852,000.000
Commercial, Term	2,611,000.000	1,634,000.000
Commercial, LOC & other	301,000.000	838,000.000
Total	$ 24,142,000.000	$ 18,586,000.000

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Business Combinations (Tables)

6 Months Ended

Jun. 30, 2011

Business Combinations

Schedule of Net Assets (Liabilities) Received from the FDIC and the Estimated Fair Value Adjustments

	Evergreen		Rainier		Nevada Security
	January 22, 2010		February 26, 2010		June 18, 2010
Cost basis net assets (liabilities)	$	58,811	$	(50,295)	$	53,629
Cash payment received from (paid to) the FDIC		-		59,351		(29,950)
Fair value adjustments:
Loans		(117,449)		(103,137)		(112,975)
Other real estate owned		(2,422)		(6,581)		(17,939)
Other intangible assets		440		6,253		322
FDIC indemnification asset		71,755		76,603		99,160
Deposits		(1,023)		(1,828)		(1,950)
Term debt		(2,496)		(13,035)		-
Other		(1,179)		(3,139)		(690)
Bargain purchase gain (goodwill)	$	6,437	$	(35,808)	$	(10,393)

Statement of Assets Acquired and Liabilities Assumed at Estimated Fair Values

	Evergreen		Rainier		Nevada Security
	January 22, 2010		February 26, 2010		June 18, 2010
Assets Acquired:
Cash and equivalents	$	18,919	$	94,067	$	66,060
Investment securities		3,850		26,478		22,626
Covered loans		252,493		458,340		215,507
Premises and equipment		-		17		50
Restricted equity securities		3,073		13,712		2,951
Goodwill		-		35,808		10,393
Other intangible assets		440		6,253		322
Mortgage servicing rights		-		62		-
Covered other real estate owned		2,421		6,580		17,938
FDIC indemnification asset		71,755		76,603		99,160
Other assets		328		3,254		2,588
Total assets acquired	$	353,279	$	721,174	$	437,595
Liabilities Assumed:
Deposits	$	285,775	$	425,771	$	437,299
Term debt		60,813		293,191		-
Other liabilities		254		2,212		296
Total liabilities assumed		346,842		721,174		437,595
Net assets acquired/bargain purchase gain	$	6,437	$	-	$	-

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Condensed Consolidated Statements of Changes in Shareholders' Equity (USD $) In Thousands, except Share data	Preferred Stock [Member]	Common Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Total
BALANCE, VALUE at Dec. 31, 2009	$ 204,335	$ 1,253,288	$ 83,939	$ 24,955	$ 1,566,517
BALANCE, SHARES at Dec. 31, 2009		86,785,588
Net income			28,326		28,326
Other comprehensive loss, net of tax				(10)	(10)
Comprehensive income					28,316
Issuance of common stock, shares		8,625,000
Issuance of common stock, value		89,786			89,786
Stock-based compensation		3,505			3,505
Stock repurchased and retired, shares		(22,541)
Stock repurchased and retired, value		(284)			(284)
Issuances of common stock under stock plans and related net tax benefit (deficiencies), shares		173,767
Issuances of common stock under stock plans and related net tax benefit (deficiencies), value		844			844
Redemption of preferred stock issued to U.S. Treasury	(214,181)				(214,181)
Issuance of preferred stock	198,289				198,289
Conversion of preferred stock to common stock, shares		18,975,000
Conversion of preferred stock to common stock, value	(198,289)	198,289
Amortization of discount on preferred stock	9,846		(9,846)
Dividends declared on preferred stock			(3,686)		(3,686)
Repurchase of warrants issued to U.S. Treasury		(4,500)			(4,500)
Cash dividends on common stock			(22,032)		(22,032)
BALANCE, VALUE at Dec. 31, 2010		1,540,928	76,701	24,945	1,642,574
BALANCE, SHARES at Dec. 31, 2010		114,536,814			114,536,814
Net income			31,252		31,252
Other comprehensive loss, net of tax				12,009	12,009
Comprehensive income					43,261
Stock-based compensation		1,987			1,987
Stock repurchased and retired, shares		(170,205)
Stock repurchased and retired, value		(1,960)			(1,960)
Issuances of common stock under stock plans and related net tax benefit (deficiencies), shares		171,173
Issuances of common stock under stock plans and related net tax benefit (deficiencies), value		(22)			(22)
Cash dividends on common stock			(11,519)		(11,519)
BALANCE, VALUE at Jun. 30, 2011		$ 1,540,933	$ 96,434	$ 36,954	$ 1,674,321
BALANCE, SHARES at Jun. 30, 2011		114,537,782			114,537,782

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Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes

Income Taxes

Note 13 – Income Taxes

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, as well as the Oregon and California state jurisdictions. Except for the California amended returns of an acquired institution for the tax years 2001, 2002, and 2003, and only as it relates to the net interest deduction taken on these amended returns, the Company is no longer subject to U.S. federal or Oregon state tax authority examinations for years before 2007 and California state tax authority examinations for years before 2004. During 2010, the Internal Revenue Service concluded an examination of the Company's U.S. income tax returns through 2008. The results of these examinations had no significant impact on the Company's financial statements.

Income taxes are accounted for using the asset and liability method. Under this method a deferred tax asset or liability is determined based on the enacted tax rates which will be in effect when the differences between the financial statement carrying amounts and tax basis of existing assets and liabilities are expected to be reported in the Company's income tax returns. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established to reduce the net carrying amount of deferred tax assets if it is determined to be more likely than not, that all or some portion of the potential deferred tax asset will not be realized.

The Company applies the provisions of FASB ASC 740, Income Taxes, relating to the accounting for uncertainty in income taxes. The Company periodically reviews its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This review takes into consideration the status of current taxing authorities' examinations of the Company's tax returns, recent positions taken by the taxing authorities on similar transactions, if any, and the overall tax environment.

The Company recorded a reduction in its liability for unrecognized tax benefits relating to temporary differences settled during audit in 2010. The Company had gross unrecognized tax benefits relating to California tax incentives of $555,000 recorded as of June 30, 2011. If recognized, the unrecognized tax benefit would reduce the 2011 annual effective tax rate by 0.4%. During the first six months of 2011, the Company recognized an expense of $6,000 in interest relating to its liability for unrecognized tax benefits during the same period. Interest expense is reported by the Company as a component of tax expense. As of June 30, 2011, the accrued interest related to unrecognized tax benefits is $177,000.

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Business Combinations (Statement of Assets Acquired and Liabilities Assumed at Estimated Fair Values) (Details) (USD $) In Thousands	6 Months Ended			0 Months Ended
	Jun. 30, 2010	Jun. 30, 2011	Dec. 31, 2010	Jan. 22, 2010 Evergreen Bank [Member]	Feb. 26, 2010 Rainier Pacific Bank [Member]	Jun. 18, 2010 Nevada Security Bank [Member]
Cash and equivalents				$ 18,919	$ 94,067	$ 66,060
Investment securities				3,850	26,478	22,626
Covered loans				252,493	458,340	215,507
Premises and equipment					17	50
Restricted equity securities		32,839	34,475	3,073	13,712	2,951
Goodwill					35,808	10,393
Other intangible assets				440	6,253	322
Mortgage servicing rights					62
Covered other real estate owned				2,421	6,580	17,938
FDIC indemnification asset				71,755	76,603	99,160
Other assets				328	3,254	2,588
Total assets acquired				353,279	721,174	437,595
Deposits				285,775	425,771	437,299
Term debt				60,813	293,191
Other liabilities				254	2,212	296
Total liabilities assumed				346,842	721,174	437,595
Net assets acquired/bargain purchase gain	$ 6,437			$ 6,437

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Segment Information (Narrative) (Details)	Jun. 30, 2011
Number of primary segments	3
Community Banking [Member]
Number of locations in operation	184

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Segment Information

6 Months Ended

Jun. 30, 2011

Segment Information

Segment Information

Note 15 – Segment Information

The Company operates three primary segments: Community Banking, Mortgage Banking and Wealth Management. The Community Banking segment's principal business focus is the offering of loan and deposit products to business and retail customers in its primary market areas. As of June 30, 2011, the Community Banking segment operated 184 locations throughout Oregon, Northern California, Washington, and Nevada.

The Mortgage Banking segment, which operates as a division of the Bank, originates, sells and services residential mortgage loans.

The Wealth Management segment consists of the operations of Umpqua Investments, which offers a full range of retail brokerage services and products to its clients who consist primarily of individual investors, and Umpqua Private Bank, which serves high net worth individuals with liquid investable assets and provides customized financial solutions and offerings, and Umpqua Financial Advisors. The Company accounts for intercompany fees and services between Umpqua Investments and the Bank at estimated fair value according to regulatory requirements for services provided. Intercompany items relate primarily to management services, referral fees and deposit rebates.

Prior to January 1, 2011, the Company reported Retail Brokerage, consisting of Umpqua Investments, as its own segment. Effective in 2011, the Company began reporting Umpqua Investments, Umpqua Private Bank, and Umpqua Financial Advisors under the Wealth Management segment. Umpqua Private Bank and Umpqua Financial Advisors do not meet the quantitative thresholds for reporting as separate segments and service the same customer base on Umpqua Investments. As a result of the change in reportable segment, prior periods have been adjusted in the financial information below.

Summarized financial information concerning the Company's reportable segments and the reconciliation to the consolidated financial results is shown in the following tables:

Segment Information
(in thousands)
					Three Months Ended June 30, 2011
		Community			Wealth		Mortgage
		Banking			Management		Banking			Consolidated
Interest income	$	121,953		$	3,304		$	3,160		$	128,417
Interest expense		18,019			465			572			19,056
Net interest income		103,934			2,839		2,588				109,361
Provision for non-covered loan and lease losses		15,459			-		-				15,459
Provision for covered loan and lease losses		3,755			-		-				3,755
Non-interest income		11,092			3,671		4,864				19,627
Non-interest expense		74,952			3,941			4,314			83,207
Income before income taxes		20,860			2,569		3,138				26,567
Provision for income taxes		6,381			1,146			1,255			8,782
Net income		14,479			1,423		1,883				17,785
Dividends and undistributed earnings allocated to participating securities		86			-			-			86
Net earnings available to common shareholders	$	14,393		$	1,423		$	1,883		$	17,699
					Six Months Ended June 30, 2011
		Community			Wealth		Mortgage
		Banking			Management		Banking			Consolidated
Interest income	$	241,010		$	5,771		$	6,528		$	253,309
Interest expense		36,831			1,045			1,170			39,046
Net interest income		204,179			4,726			5,358			214,263
Provision for non-covered loan losses		30,489			-			-			30,489
Provision for covered loan losses		11,023			-			-			11,023
Non-interest income		23,768			7,267		10,177				41,212
Non-interest expense		150,711			8,043			8,654			167,408
Income before income taxes		35,724			3,950			6,881			46,555
Provision for income taxes		11,174			1,377			2,752			15,303
Net income		24,550			2,573			4,129			31,252
Dividends and undistributed earnings allocated to participating securities		148			-			-			148
Net earnings available to common shareholders	$	24,402		$	2,573		$	4,129		$	31,104
					Three Months Ended June 30, 2010
		Community			Wealth		Mortgage
		Banking			Management Banking Consolidated
Interest income	$	110,109		$	2,427		$	3,068		$	115,604
Interest expense		22,360			307			637			23,304
Net interest income		87,749			2,120			2,431			92,300
Provision for non-covered loan and lease losses		29,767			-			-			29,767
Provision for covered loan and lease losses		-			-			-			-
Non-interest income		11,771			3,540			3,252			18,563
Non-interest expense		67,332			4,087			3,414			74,833
Income (loss) before income taxes		2,421			1,573			2,269			6,263
Provision (benefit from) for income taxes		1,374			519			907			2,800
Net income (loss)		1,047			1,054			1,362			3,463
Preferred stock dividends		-			-			-			-
Dividends and undistributed earnings allocated to participating securities		16			-			-			16
Net earnings (loss) available to common shareholders	$	1,031		$	1,054		$	1,362		$	3,447
					Six Months Ended June 30, 2010
		Community			Wealth		Mortgage
		Banking			Management Banking Consolidated
Interest income	$	214,209		$	4,821		$	5,943		$	224,973
Interest expense		43,687			602			1,332			45,621
Net interest income		170,522			4,219			4,611			179,352
Provision for non-covered loan losses		71,873			-			-			71,873
Provision for covered loan losses		-			-			-			-
Non-interest income		35,218			6,631			6,761			48,610
Non-interest expense		130,362			7,863			6,479			144,704
Income (loss) before income taxes		3,505			2,987			4,893			11,385
(Benefit from) provision for income taxes		(3,504	)		955			1,957			(592	)
Net income (loss)		7,009			2,032			2,936			11,977
Preferred stock dividends		12,192			-			-			12,192
Dividends and undistributed earnings allocated to participating securities		31			-			-			31
Net (loss) earnings available to common shareholders	$	(5,214	)	$	2,032		$	2,936		$	(246	)
					June 30, 2011
		Community			Wealth		Mortgage
		Banking			Management Banking Consolidated
Total assets	$	11,092,529		$	48,885	$	318,278		$	11,459,692
Total loans and leases (covered and non-covered)	$	6,161,711		$	34,514	$	238,004		$	6,434,229
Total deposits	$	8,859,870		$	267,037	$	19,505		$	9,146,412
					December 31, 2010
		Community			Wealth		Mortgage
		Banking			Management Banking Consolidated
Total assets	$	11,314,681		$	37,757	$	316,272		$	11,668,710
Total loans and leases (covered and non-covered)	$	6,198,532		$	23,631	$	222,722		$	6,444,885
Total deposits	$	9,160,058		$	262,148	$	11,599		$	9,433,805

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Covered Assets and FDIC Indemnification Asset (Summary of Activity Related to the FDIC Indemnification Asset) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Balance, beginning of period	$ 131,872,000.000	$ 141,955,000.000	$ 146,413,000.000
Acquisitions		99,160,000.000		247,518,000.000
Change in FDIC indemnification asset	(5,551,000.000)	263,000.000	(2,646,000.000)	873,000.000
Transfers to due from FDIC and other	(9,393,000.000)	(16,024,000.000)	(26,839,000.000)	(23,037,000.000)
Balance, end of period	116,928,000.000	225,354,000.000	116,928,000.000	225,354,000.000
Evergreen Bank [Member]
Balance, beginning of period	40,379,000.000	71,696,000.000	40,606,000.000
Acquisitions				71,755,000.000
Change in FDIC indemnification asset	(2,895,000.000)	539,000.000	1,850,000.000	939,000.000
Transfers to due from FDIC and other	(1,366,000.000)	(167,000.000)	(6,338,000.000)	(626,000.000)
Balance, end of period	36,118,000.000	72,068,000.000	36,118,000.000	72,068,000.000
Rainier Pacific Bank [Member]
Balance, beginning of period	37,875,000.000	70,259,000.000	43,726,000.000
Acquisitions				76,603,000.000
Change in FDIC indemnification asset	(811,000.000)	(360,000.000)	(4,921,000.000)	(150,000.000)
Transfers to due from FDIC and other	(1,065,000.000)	(15,301,000.000)	(2,806,000.000)	(21,855,000.000)
Balance, end of period	35,999,000.000	54,598,000.000	35,999,000.000	54,598,000.000
Nevada Security Bank [Member]
Balance, beginning of period	53,618,000.000		62,081,000.000
Acquisitions		99,160,000.000		99,160,000.000
Change in FDIC indemnification asset	(1,845,000.000)	84,000.000	425,000.000	84,000.000
Transfers to due from FDIC and other	(6,962,000.000)	(556,000.000)	(17,695,000.000)	(556,000.000)
Balance, end of period	$ 44,811,000.000	$ 98,688,000.000	$ 44,811,000.000	$ 98,688,000.000

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Covered Assets and FDIC Indemnification Asset (Changes in Accretable Yield in Acquired Loans) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Balance, beginning of period	$ 299,667,000.000	$ 351,797,000.000	$ 336,901,000.000
Additions resulting from acquisitions		65,606,000.000	(43,773,000.000)	425,056,000.000
Accretion Interest Income	(22,226,000.000)	(12,656,000.000)		(18,911,000.000)
Accretable Yield Disposals	(8,387,000.000)	(4,255,000.000)	(19,227,000.000)	(6,303,000.000)
Reclassifications (to)/from nonaccretable difference	11,006,000.000	(45,826,000.000)	6,159,000.000	(45,176,000.000)
Balance, end of period	280,060,000.000	354,666,000.000	280,060,000.000	354,666,000.000
Evergreen Bank [Member]
Balance, beginning of period	75,081,000.000	118,119,000.000	90,771,000.000
Additions resulting from acquisitions			(15,613,000.000)	121,592,000.000
Accretion Interest Income	(7,904,000.000)	(3,528,000.000)		(6,759,000.000)
Accretable Yield Disposals	(4,181,000.000)	(2,234,000.000)	(6,973,000.000)	(2,825,000.000)
Reclassifications (to)/from nonaccretable difference	4,473,000.000	(28,422,000.000)	(716,000.000)	(28,073,000.000)
Balance, end of period	67,469,000.000	83,935,000.000	67,469,000.000	83,935,000.000
Rainier Pacific Bank [Member]
Balance, beginning of period	155,285,000.000	233,678,000.000	172,615,000.000
Additions resulting from acquisitions			(17,111,000.000)	237,858,000.000
Accretion Interest Income	(8,396,000.000)	(8,575,000.000)		(11,599,000.000)
Accretable Yield Disposals	(2,803,000.000)	(1,931,000.000)	(9,447,000.000)	(3,388,000.000)
Reclassifications (to)/from nonaccretable difference	(89,000.000)	(17,490,000.000)	(2,060,000.000)	(17,189,000.000)
Balance, end of period	143,997,000.000	205,682,000.000	143,997,000.000	205,682,000.000
Nevada Security Bank [Member]
Balance, beginning of period	69,301,000.000		73,515,000.000
Additions resulting from acquisitions		65,606,000.000	(11,049,000.000)	65,606,000.000
Accretion Interest Income	(5,926,000.000)	(553,000.000)		(553,000.000)
Accretable Yield Disposals	(1,403,000.000)	(90,000.000)	(2,807,000.000)	(90,000.000)
Reclassifications (to)/from nonaccretable difference	6,622,000.000	86,000.000	8,935,000.000	86,000.000
Balance, end of period	$ 68,594,000.000	$ 65,049,000.000	$ 68,594,000.000	$ 65,049,000.000

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Condensed Consolidated Statements of Comprehensive Income
Net income	$ 17,785	$ 3,463	$ 31,252	$ 11,977
Available for sale securities:
Unrealized gains arising during the period	24,835	14,249	25,649	28,094
Reclassification adjustment for net gains realized in earnings (net of tax expense of $2,271 for the three months ended June 30, 2011 and net of tax expense of $2,271 and $1 for the six months ended June 30, 2011 and 2010, respectively)	(3,407)		(3,407)	(1)
Income tax expense related to unrealized gains	(9,934)	(5,699)	(10,259)	(11,238)
Net change in unrealized gains	11,494	8,550	11,983	16,855
Held to maturity securities:
Unrealized (losses) gains related to factors other than credit (net of tax benefit of $35 and $30 for the three and six months ended June 30, 2011, respectively, and tax expense of $69 for the six months ended June 30, 2010)	(53)		(45)	103
Reclassification adjustment for impairments realized in net income (net of tax benefit of $10 for the three months ended June 30, 2011, and net of tax benefit of $20 and $116 for the six months ended June 30, 2011 and 2010, respectively)	15		30	173
Accretion of unrealized losses related to factors other than credit to investment securities held to maturity (net of tax benefit of $10 and $34 for the three months ended June 30, 2011 and 2010, respectively, and net of tax benefit of $27 and $74 for the six months ended June 30, 2011 and 2010, respectively)	15	50	41	112
Net change in unrealized losses related to factors other than credit	(23)	50	26	388
Other comprehensive income, net of tax	11,471	8,600	12,009	17,243
Comprehensive income	$ 29,256	$ 12,063	$ 43,261	$ 29,220

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Mortgage Servicing Rights

6 Months Ended

Jun. 30, 2011

Mortgage Servicing Rights

Mortgage Servicing Rights

Note 7 – Mortgage Servicing Rights

The following table presents the changes in the Company's mortgage servicing rights ("MSR") for the three and six months ended June 30, 2011 and 2010:

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Balance, beginning of period	$	15,605		$	13,628		$	14,454		$	12,625
Additions for new mortgage servicing rights capitalized		1,073			938			2,407			2,008
Acquired mortgage servicing rights		-			-			-			62
Changes in fair value:
Due to changes in model inputs or assumptions(1)		(103	)		284			25			129
Other(2)		(225	)		(1,955	)		(536	)		(1,929	)
Balance, end of period	$	16,350		$	12,895		$	16,350		$	12,895

(1) Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.

(2) Represents changes due to collection/realization of expected cash flows over time.

Information related to our serviced loan portfolio as of June 30, 2011 and December 31, 2010 was as follows:

(dollars in thousands)

	June 30, 2011			December 31, 2010
Balance of loans serviced for others	$	1,751,700		$	1,603,414
MSR as a percentage of serviced loans		0.93	%		0.90	%

The amount of contractually specified servicing fees, late fees and ancillary fees earned, recorded in mortgage banking revenue on the Condensed Consolidated Statements of Operations, was $1.1 million and $2.3 million for the three and six months ended June 30, 2011, as compared to $933,000 and $1.8 million for the three and six months ended June 30, 2010.

Key assumptions used in measuring the fair value of MSR as of June 30, 2011 and December 31, 2010 were as follows:

	June 30, 2011			December 31, 2010
Constant prepayment rate		17.84	%		18.54	%
Discount rate		8.59	%		8.62	%
Weighted average life (years)		4.8			4.5

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Allowance for Non-Covered Loan Loss and Credit Quality (Narrative) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011 Maximum [Member]	Jun. 30, 2011 Minimum [Member]	Jun. 30, 2011 Restructured Loans [Member]	Dec. 31, 2010 Restructured Loans [Member]
Unallocated allowance, maximum percentage	10.00%
Secured loan portfolio, percentage	80.00%
External appraisal		9	6
Loans past due as to maturity	90
Financing Receivable, Modifications, Recorded Investment				$ 81.0	$ 84.4
Percentage of loan collateral balance	100.00%

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Allowance for Non-Covered Loan Loss and Credit Quality (Non-Covered Non-Accrual Loans and Loans Past Due) (Details) (USD $) In Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Dec. 31, 2010	Jun. 30, 2010
Total Non-covered Loans and Leases	$ 5,747,239		$ 5,737,678
Deferred loan fees, net	(11,686)	(11,031)
Non-covered loans and leases	5,735,553	5,658,987
Commercial [Member]
Total Non-covered Loans and Leases	1,360,670		1,255,853
Commercial [Member] | LOC & Other [Member]
30-59 Days Past Due	476	5,939
60-89 Days Past Due	495	1,418
Greater Than 90 Days and Accruing	5,713	18
Total Past Due	6,684	7,375
Nonaccrual	14,809	28,034
Current	766,775	712,010
Total Non-covered Loans and Leases	788,268	747,419
Commercial [Member] | Term [Member]
30-59 Days Past Due	1,548	2,010
60-89 Days Past Due	957	932
Greater Than 90 Days and Accruing	750
Total Past Due	3,255	2,942
Nonaccrual	8,070	6,271
Current	561,077	500,240
Total Non-covered Loans and Leases	572,402	509,453
Commercial Real Estate [Member]
Total Non-covered Loans and Leases	3,829,498		3,977,475
Commercial Real Estate [Member] | Residential Development [Member]
30-59 Days Past Due	2,573	640
Total Past Due	2,573	640
Nonaccrual	25,858	34,586
Current	84,226	112,587
Total Non-covered Loans and Leases	112,657	147,813
Commercial Real Estate [Member] | Construction & Development [Member]
30-59 Days Past Due	99	2,172
60-89 Days Past Due		6,726
Total Past Due	99	8,898
Nonaccrual	8,093	20,124
Current	176,515	218,792
Total Non-covered Loans and Leases	184,707	247,814
Commercial Real Estate [Member] | Term & Multifamily [Member]
30-59 Days Past Due	15,154	14,596
60-89 Days Past Due	16,940	8,328
Greater Than 90 Days and Accruing	555	3,008
Total Past Due	32,649	25,932
Nonaccrual	53,059	49,162
Current	3,446,426	3,408,381
Total Non-covered Loans and Leases	3,532,134	3,483,475
Residential [Member]
Total Non-covered Loans and Leases	522,487		470,135
Residential [Member] | Mortgage [Member]
30-59 Days Past Due	1,357	1,314
60-89 Days Past Due	908	1,101
Greater Than 90 Days and Accruing	4,467	3,372
Total Past Due	6,732	5,787
Current	238,302	216,629
Total Non-covered Loans and Leases	245,034	222,416
Residential [Member] | Home Equity Loans & Lines [Member]
30-59 Days Past Due	1,800	1,096
60-89 Days Past Due	1,277	1,351
Greater Than 90 Days and Accruing	1,123	232
Total Past Due	4,200	2,679
Current	273,253	275,906
Total Non-covered Loans and Leases	277,453	278,585
Consumer & Other [Member]
30-59 Days Past Due	207	361
60-89 Days Past Due	60	233
Greater Than 90 Days and Accruing	529	441
Total Past Due	796	1,035
Current	33,788	32,008
Total Non-covered Loans and Leases	34,584	33,043
Total Loan [Member]
30-59 Days Past Due	23,214	28,128
60-89 Days Past Due	20,637	20,089
Greater Than 90 Days and Accruing	13,137	7,071
Total Past Due	56,988	55,288
Nonaccrual	109,889	138,177
Current	5,580,362	5,476,553
Total Non-covered Loans and Leases	$ 5,747,239	$ 5,670,018

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Covered Assets and FDIC Indemnification Asset (Activity in the Covered Allowance for Loan and Lease Losses) (Details) (USD $) In Thousands	Jun. 30, 2011	Jun. 30, 2010
Collectively evaluated for impairment	$ 92,134	$ 106,590
Financing Receivable, Individually Evaluated for Impairment	196,563	251,170
Financing Receivable, Collectively Evaluated for Impairment	5,550,676	5,486,508
Commercial Real Estate [Member]
Collectively evaluated for impairment	59,277	61,127
Financing Receivable, Individually Evaluated for Impairment	166,464	194,373
Financing Receivable, Collectively Evaluated for Impairment	3,663,034	3,783,102
Commercial [Member]
Collectively evaluated for impairment	20,812	19,836
Financing Receivable, Individually Evaluated for Impairment	29,921	52,295
Financing Receivable, Collectively Evaluated for Impairment	1,330,749	1,203,558
Residential [Member]
Collectively evaluated for impairment	5,136	9,548
Financing Receivable, Individually Evaluated for Impairment	178	4,502
Financing Receivable, Collectively Evaluated for Impairment	522,309	465,633
Consumer & Other [Member]
Collectively evaluated for impairment	868	848
Financing Receivable, Collectively Evaluated for Impairment	$ 34,584	$ 34,215

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Mortgage Servicing Rights (Tables)

6 Months Ended

Jun. 30, 2011

Mortgage Servicing Rights

Schedule of Changes in Mortgage Servicing Rights

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Balance, beginning of period	$	15,605		$	13,628		$	14,454		$	12,625
Additions for new mortgage servicing rights capitalized		1,073			938			2,407			2,008
Acquired mortgage servicing rights		-			-			-			62
Changes in fair value:
Due to changes in model inputs or assumptions(1)		(103	)		284			25			129
Other(2)		(225	)		(1,955	)		(536	)		(1,929	)
Balance, end of period	$	16,350		$	12,895		$	16,350		$	12,895

(1) Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.

(2) Represents changes due to collection/realization of expected cash flows over time.

Schedule of Information Relates to Serviced Loan Portfolio

	June 30, 2011			December 31, 2010
Balance of loans serviced for others	$	1,751,700		$	1,603,414
MSR as a percentage of serviced loans		0.93	%		0.90	%

Key Assumptions Used in Measuring the Fair Value of MSR

	June 30, 2011			December 31, 2010
Constant prepayment rate		17.84	%		18.54	%
Discount rate		8.59	%		8.62	%
Weighted average life (years)		4.8			4.5

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Derivatives

6 Months Ended

Jun. 30, 2011

Derivatives

Derivatives

Note 11 – Derivatives

The Company may use derivatives to hedge the risk of changes in the fair values of interest rate lock commitments, residential mortgage loans held for sale, and mortgage servicing rights. None of the Company's derivatives are designated as hedging instruments. Rather, they are accounted for as free-standing derivatives, or economic hedges, with changes in the fair value of the derivatives reported in income. The Company primarily utilizes forward interest rate contracts in its derivative risk management strategy.

The Bank enters into forward delivery contracts to sell residential mortgage loans or mortgage-backed securities to broker/dealers at specific prices and dates ("MBS TBAs") in order to hedge the interest rate risk in its portfolio of mortgage loans held for sale and its residential mortgage loan commitments. Credit risk associated with forward contracts is limited to the replacement cost of those forward contracts in a gain position. There were no counterparty default losses on forward contracts in the three and six months ended June 30, 2011 and 2010. Market risk with respect to forward contracts arises principally from changes in the value of contractual positions due to changes in interest rates. The Bank limits its exposure to market risk by monitoring differences between commitments to customers and forward contracts with broker/dealers. In the event the Company has forward delivery contract commitments in excess of available mortgage loans, the Company completes the transaction by either paying or receiving a fee to or from the broker/dealer equal to the increase or decrease in the market value of the forward contract. At June 30, 2011, the Bank had commitments to originate mortgage loans held for sale totaling $67.6 million and forward sales commitments of $106.0 million.

The Company's mortgage banking derivative instruments do not have specific credit risk-related contingent features. The forward sales commitments do have contingent features that may require transferring collateral to the broker/dealers upon their request. However, this amount would be limited to the net unsecured loss exposure at such point in time and would not materially affect the Company's liquidity or results of operations.

Effective in the second quarter of 2011, the Bank began executing interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting the interest rate swaps that the Bank executes with a third party, such that the Bank minimizes its net risk exposure. As of June 30, 2011, the Bank had 12 interest rate swaps with an aggregate notional amount of $86.3 million related to this program. During the three months ended June 30, 2011, the Bank recognized a net gain of $85,000 related to changes in the fair value of these swaps.

In connection with the interest rate swap program with commercial customers, the Bank has agreements with its derivative counterparties that contain a provision where if the Bank defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Bank could also be declared in default on its derivative obligations.

The Bank also has agreements with its derivative counterparties that contain a provision where if the Bank fails to maintain its status as a well/adequately capitalized institution, then the counterparty could terminate the derivative positions and the Bank would be required to settle its obligations under the agreements. Similarly, the Bank could be required to settle its obligations under certain of its agreements if specific regulatory events occur, such as if Bank were issued a prompt corrective action directive or a cease and desist order, or if certain regulatory ratios fall below specified levels.

As of June 30, 2011 the termination value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $1.4 million. The Bank has minimum collateral posting thresholds with certain of its derivative counterparties, and has been required to post collateral against its obligations under these agreements of $1.3 million as of June 30, 2011. If the Bank had breached any of these provisions at June 30, 2011, it could have been required to settle its obligations under the agreements at the termination value.

The following tables summarize the types of derivatives, separately by assets and liabilities, their locations on the Condensed Consolidated Balance Sheets, and the fair values of such derivatives as of June 30, 2011 and December 31, 2010:

(in thousands)

Derivatives not designated as hedging instrument	Balance Sheet Location	Asset Derivatives				Liability Derivatives
		June 30, 2011		December 31, 2010		June 30, 2011		December 31, 2010
Interest rate lock commitments	Other assets/Other liabilities	$	319	$	306	$	91	$	170
Interest rate forward sales commitments	Other assets/Other liabilities		272		754		124		191
Interest rate swaps	Other assets/Other liabilities		1,388		-		1,303		-
Total		$	1,979	$	1,060	$	1,518	$	361

The following table summarizes the types of derivatives, their locations within the Condensed Consolidated Statements of Operations, and the gains (losses) recorded during the three and six months ended June 30, 2011 and 2010:

(in thousands)

Derivatives not designated as hedging instrument	Income Statement Location	Three months ended June 30,				Six months ended June 30,
		2011		2010		2011		2010
Interest rate lock commitments	Mortgage banking revenue	$	(18)	$	1,040	$	92	$	1,207
Interest rate forward sales commitments	Mortgage banking revenue		(2,180)		(3,517)		(1,983)		(4,349)
Interest rate swaps	Other income		85		-		85		-
Total		$	(2,113)	$	(2,477)	$	(1,806)	$	(3,142)

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Condensed Consolidated Balance Sheets (USD $)	Jun. 30, 2011	Dec. 31, 2010
ASSETS
Cash and due from banks	$ 137,033,000	$ 111,946,000
Interest bearing deposits	478,221,000	891,634,000
Temporary investments	628,000	545,000
Total cash and cash equivalents	615,882,000	1,004,125,000
Investment securities
Trading, at fair value	2,522,000	3,024,000
Available for sale, at fair value	3,177,460,000	2,919,180,000
Held to maturity, at amortized cost	5,553,000	4,762,000
Loans held for sale	60,416,000	75,626,000
Non-covered loans and leases	5,735,553,000	5,658,987,000
Allowance for non-covered loan and lease losses	(97,795,000)	(101,921,000)
Net non-covered loans and leases	5,637,758,000	5,557,066,000
Covered loans and leases, net of allowance of $10,219 and $2,721	698,676,000	785,898,000
Restricted equity securities	32,839,000	34,475,000
Premises and equipment, net	145,192,000	136,599,000
Goodwill and other intangible assets, net	679,671,000	681,969,000
Mortgage servicing rights, at fair value	16,350,000.000	14,454,000.000
Non-covered other real estate owned	34,409,000	32,791,000
Covered other real estate owned	30,153,000	29,863,000
FDIC indemnification asset	116,928,000	146,413,000
Other assets	205,883,000	242,465,000
Total assets	11,459,692,000	11,668,710,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Noninterest bearing	1,733,640,000	1,616,687,000
Interest bearing	7,412,772,000	7,817,118,000
Total deposits	9,146,412,000	9,433,805,000
Securities sold under agreements to repurchase	120,889,000	73,759,000
Term debt	256,719,000	262,760,000
Junior subordinated debentures, at fair value	81,766,000	80,688,000
Junior subordinated debentures, at amortized cost	102,705,000	102,866,000
Other liabilities	76,880,000	72,258,000
Total liabilities	9,785,371,000	10,026,136,000
COMMITMENTS AND CONTINGENCIES (NOTE 10)
SHAREHOLDERS' EQUITY
Common stock, no par value, 200,000,000 shares authorized; issued and outstanding: 114,537,782 in 2011 and 114,536,814 in 2010	1,540,933,000	1,540,928,000
Retained earnings	96,434,000	76,701,000
Accumulated other comprehensive income	36,954,000	24,945,000
Total shareholders' equity	1,674,321,000	1,642,574,000
Total liabilities and shareholders' equity	$ 11,459,692,000	$ 11,668,710,000

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2011

Commitments and Contingencies

Schedule Of Commitments And Contingencies

	As of June 30, 2011
Commitments to extend credit	$	1,199,041
Commitments to extend overdrafts	$	239,788
Forward sales commitments	$	106,000
Standby letters of credit	$	59,501
Commitments to originate loans held for sale	$	67,591

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Commitments and Contingencies (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended				1 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010	Mar. 31, 2011	Mar. 31, 2010	Dec. 31, 2009	Mar. 31, 2008 Visa Inc [Member]	Jun. 30, 2011 Visa Inc [Member]
Number of non-cancelable operating leases	136		136
Option to purchase number of leased facilities			1
Rent expense	$ 4,000,000	$ 3,800,000	$ 8,200,000	$ 7,300,000
Rent income	200,000	327,000	472,000	475,000
Standby letters of credit that expire within one year	32,300,000		32,300,000
Standby letters of credit that expire thereafter	27,200,000		27,200,000
Fair value of guarantee with standby letters of credit	256,000		256,000
Reserve for unfunded commitments	988,000	734,000	988,000	734,000	818,000	911,000	765,000	731,000
Other company stock owned shares	468,659		468,659
Conversion ratio from Class B shares into Class A shares									0.48810
Value of the Class A shares	84.26		84.26
Unredeemed Class A equivalent shares owned										$ 19,300,000
Concentration Risk, Other Risk			80		82

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Earnings Per Common Share (Schedule of Weighted Average Outstanding Securities Not Included in the Computation of Diluted Earnings Per Common Share) (Details) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Anti-dilutive weighted average outstanding securities	1,859	1,297	1,833	1,796
Stock Options [Member]
Anti-dilutive weighted average outstanding securities	1,859	1,287	1,833	1,233
CPP Warrants [Member]
Anti-dilutive weighted average outstanding securities				552
Restricted Stock [Member]
Anti-dilutive weighted average outstanding securities		10		11

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Mortgage Servicing Rights (Key Assumptions Used in Measuring the Fair Value of MSR) (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Dec. 31, 2010
Mortgage Servicing Rights
Constant prepayment rate	17.84%	18.54%
Discount rate	8.59%	8.62%
Weighted average life (years)	4.80	4.50

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Investment Securities (Summary of Significant Inputs Used to Estimate Credit Loss on Non-Agency Collateralized Mortgage Obligations) (Details)	Jun. 30, 2011	Jun. 30, 2010
Maximum [Member]
Constant prepayment rate	20.00%	25.00%
Collateral default rate	30.00%	45.00%
Loss severity	65.00%	50.00%
Minimum [Member]
Constant prepayment rate	5.00%	4.00%
Collateral default rate	5.00%	8.00%
Loss severity	30.00%	20.00%
Weighted Average [Member]
Constant prepayment rate	14.40%	14.90%
Collateral default rate	13.20%	16.80%
Loss severity	39.00%	34.60%

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Allowance for Non-Covered Loan Loss and Credit Quality (Summary of Reserve for Unfunded Commitments Activity) (Details) (USD $)	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended			3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011 Commercial [Member]	Jun. 30, 2010 Commercial [Member]	Jun. 30, 2011 Commercial [Member]	Jun. 30, 2010 Commercial [Member]	Jun. 30, 2011 Consumer & Other [Member]	Jun. 30, 2011 Consumer & Other [Member]	Jun. 30, 2010 Consumer & Other [Member]	Mar. 31, 2010 Consumer & Other [Member]	Jun. 30, 2011 Commercial Real Estate [Member]	Jun. 30, 2010 Commercial Real Estate [Member]	Jun. 30, 2011 Commercial Real Estate [Member]	Jun. 30, 2010 Commercial Real Estate [Member]	Jun. 30, 2011 Residential [Member]	Jun. 30, 2010 Residential [Member]	Jun. 30, 2011 Residential [Member]	Jun. 30, 2010 Residential [Member]
Balance, beginning of period	$ 911,000	$ 765,000	$ 818,000	$ 731,000	$ 621,000	$ 531,000	$ 575,000	$ 484,000	$ 52,000	$ 52,000	$ 46,000	$ 47,000	$ 76,000	$ 47,000	$ 33,000	$ 57,000	$ 162,000	$ 140,000	$ 158,000	$ 144,000
Net change to other expense	77,000	(31,000)	170,000	3,000	84,000	(21,000)	130,000	26,000	1,000	1,000	1,000		(15,000)	(6,000)	28,000	(16,000)	7,000	(4,000)	11,000	(8,000)
Balance, end of period	988,000	734,000	988,000	734,000	705,000	510,000	705,000	510,000	53,000	53,000	47,000	47,000	61,000	41,000	61,000	41,000	169,000	136,000	169,000	136,000
Unfunded commitments	$ 1,007,961,000	$ 792,602,000	$ 1,007,961,000	$ 792,602,000	$ 674,210,000	$ 501,667,000	$ 674,210,000	$ 501,667,000	$ 45,483,000	$ 45,483,000	$ 39,938,000		$ 61,478,000	$ 41,354,000	$ 61,478,000	$ 41,354,000	$ 226,790,000	$ 209,643,000	$ 226,790,000	$ 209,643,000

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Covered Assets and FDIC Indemnification Asset (Major Types of Covered Loans) (Details) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Commercial real estate, Term & multifamily	$ 3,532,134,000	$ 3,483,475,000
Commercial real estate, Construction & development	184,707,000	247,814,000
Commercial real estate, Residential development	112,657,000	147,813,000
Commercial, Term	572,402,000	509,453,000
Commercial, LOC & other	788,268,000	747,419,000
Residential, Mortgage	245,034,000	222,416,000
Residential, Home equity loans & lines	277,453,000	278,585,000
Consumer & other	34,584,000	33,043,000
Total	5,747,239,000	5,670,018,000
Evergreen Bank [Member] | Covered Loans [Member]
Commercial real estate, Term & multifamily	107,772,000	124,743,000
Commercial real estate, Construction & development	12,398,000	14,162,000
Commercial real estate, Residential development	7,055,000	11,024,000
Commercial, Term	15,406,000	18,828,000
Commercial, LOC & other	9,655,000	11,876,000
Residential, Mortgage	8,079,000	8,129,000
Residential, Home equity loans & lines	5,278,000	6,737,000
Consumer & other	2,293,000	2,781,000
Total	167,936,000	198,280,000
Rainier Pacific Bank [Member] | Covered Loans [Member]
Commercial real estate, Term & multifamily	276,358,000	303,585,000
Commercial real estate, Construction & development	690,000	854,000
Commercial real estate, Residential development	171,000	2,310,000
Commercial, Term	8,913,000	10,811,000
Commercial, LOC & other	12,623,000	14,320,000
Residential, Mortgage	31,120,000	35,026,000
Residential, Home equity loans & lines	22,925,000	25,163,000
Consumer & other	6,416,000	8,058,000
Total	359,216,000	400,127,000
Nevada Security Bank [Member] | Covered Loans [Member]
Commercial real estate, Term & multifamily	131,819,000	141,314,000
Commercial real estate, Construction & development	6,730,000	7,419,000
Commercial real estate, Residential development	8,721,000	11,372,000
Commercial, Term	12,932,000	12,961,000
Commercial, LOC & other	6,202,000	9,031,000
Residential, Mortgage	1,869,000	1,669,000
Residential, Home equity loans & lines	3,251,000	3,725,000
Total	171,524,000	187,491,000
Covered Loans [Member]
Commercial real estate, Term & multifamily	515,949,000	569,642,000
Commercial real estate, Construction & development	19,818,000	22,435,000
Commercial real estate, Residential development	15,947,000	24,706,000
Commercial, Term	37,251,000	42,600,000
Commercial, LOC & other	28,480,000	35,227,000
Residential, Mortgage	41,068,000	44,824,000
Residential, Home equity loans & lines	31,454,000	35,625,000
Consumer & other	8,709,000	10,839,000
Total	$ 698,676,000	$ 785,898,000

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Fair Value Measurement (Schedule of Reconciliation of Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) on a Recurring Basis) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Fair Value Measurement
Mortgage servicing rights, Beginning Balance	$ 15,605,000	$ 13,628,000	$ 14,454,000.000	$ 12,625,000.000
Mortgage servicing rights, Change included in earnings	(328,000)	(1,671,000)	(511,000.000)	(1,800,000.000)
Mortgage servicing rights, Purchases and issuances	1,073,000	938,000	2,407,000.000	2,070,000.000
Mortgage servicing rights, Ending Balance	16,350,000	12,895,000.000	16,350,000	12,895,000.000
Mortgage servicing rights, Net change in unrealized gains or (losses) relating to items held at end of period	(45,000)	(1,368,000)	79,000.000	(1,263,000.000)
Junior subordinated debentures, Beginning Balance	81,220,000	79,563,000	80,688,000.000	85,666,000.000
Junior subordinated debentures, Change included in earnings	1,523,000		3,033,000.000	(4,150,000.000)
Junior subordinated debentures, Sales and settlements	(977,000)	(957,000)	(1,955,000.000)	(1,926,000.000)
Junior subordinated debentures, Ending Balance	81,766,000	79,590,000.000	81,766,000	79,590,000.000
Junior subordinated debentures, Net change in unrealized gains or losses relating to items held at end of period	$ 1,523,000	$ 984,000	$ 3,033,000.000	$ (4,150,000.000)

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Fair Value Measurement (Schedule of Carrying Value and Fair Value of Financial Instruments Not Recorded at Fair Value) (Details) (USD $) Share data in Thousands							6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Jun. 30, 2011 Carrying Value [Member]	Dec. 31, 2010 Carrying Value [Member]	Jun. 30, 2011 Estimated Fair Value [Member]	Dec. 31, 2010 Estimated Fair Value [Member]
Cash and cash equivalents	$ 137,033,000		$ 111,946,000				$ 615,882,000	$ 1,004,125,000	$ 615,882,000	$ 1,004,125,000
Trading securities	2,522,000		3,024,000				2,522,000	3,024,000	2,522,000	3,024,000
Securities available for sale	3,177,460,000		2,919,180,000				3,177,460,000	2,919,180,000	3,177,460,000	2,919,180,000
Securities held to maturity	5,553,000		4,762,000				5,553,000	4,762,000	5,733,000	4,774,000
Loans held for sale	60,416,000		75,626,000				60,416,000	75,626,000	60,416,000	75,626,000
Non-covered loans and leases, net	5,735,553,000		5,658,987,000				5,637,758,000	5,557,066,000	5,691,951,000	5,767,506,000
Covered loans and leases, net	698,676,000		785,898,000				698,676,000	785,898,000	783,045,000	893,682,000
Restricted equity securities	32,839,000		34,475,000				32,839,000	34,475,000	32,839,000	34,475,000
Mortgage servicing rights	16,350,000.000	15,605,000.000	14,454,000.000	12,895,000.000	13,628,000.000	12,625,000.000	16,350,000.000	14,454,000.000	16,350,000.000	14,454,000.000
Bank owned life insurance assets							91,169,000	90,161,000	91,169,000	90,161,000
FDIC indemnification asset	116,928,000		146,413,000				116,928,000	146,413,000	63,211,000	90,011,000
Derivatives	1,979,000		1,060,000				1,979,000	1,060,000	1,979,000	1,060,000
Visa Class B common stock							0		18,311	15,987
Deposits	9,146,412,000		9,433,805,000				9,146,412,000	9,433,805,000	9,149,607,000	9,464,406,000
Securities sold under agreements to repurchase	120,889,000		73,759,000				120,889,000	73,759,000	120,889,000	73,759,000
Term debt	256,719,000		262,760,000				256,719,000	262,760,000	278,406,000	282,127,000
Junior subordinated debentures, at fair value	81,766,000		80,688,000				81,766,000	80,688,000	81,766,000	80,688,000
Junior subordinated debentures, at amortized cost	102,705,000		102,866,000				102,705,000	102,866,000	66,799,000	65,771,000
Derivatives	$ 1,518,000		$ 361,000				$ 1,518,000	$ 361,000	$ 1,518,000	$ 361,000

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Fair Value Measurement (Schedule of Losses Resulting from Nonrecurring Fair Value Adjustments) (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Total loss from nonrecurring measurements	$ 21,378	$ 32,263	$ 40,705	$ 66,599
Residential Mortgage-Backed Securities and Collateralized Mortgage Obligations [Member]
Loss from nonrecurring measurements	47		72	289
Non-covered Loans and Leases [Member]
Loss from nonrecurring measurements	17,278	31,449	33,194	64,589
Non-covered Other Real Estate Owned [Member]
Loss from nonrecurring measurements	3,388	814	5,518	1,721
Covered Other Real Estate Owned [Member]
Loss from nonrecurring measurements	$ 665		$ 1,921

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Investment Securities (Narrative) (Details)	6 Months Ended
	Jun. 30, 2011
Investment Securities
Underlying mortgages of held-to-maturity securities with other-than-temporary impairment, loan-to-value	69.00%
Underlying borrowers, FICO score, weighted average	731
Portion of underlying mortgages with limited documentation	59.00%

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Investment Securities (Amortized Cost, Unrealized Gains and Losses, and Fair Value of Investment Securities) (Details) (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Available-for-sale Securities, Amortized Cost	$ 3,115,073	$ 2,876,765
Available-for-sale Securities, Unrealized Gains	66,361	63,780
Available-for-sale Securities, Unrealized Losses	(3,974)	(21,365)
Available-for-sale Securities, Fair Value	3,177,460	2,919,180
Held-to-maturity Securities, Amortized Cost	5,553	4,762
Held-to-maturity Securities, Unrealized Gains	205	221
Held-to-maturity Securities, Unrealized Losses	(25)	(209)
Held-to-maturity Securities, Fair Value	5,733	4,774
U.S. Treasury and Agencies [Member]
Available-for-sale Securities, Amortized Cost	117,392	117,551
Available-for-sale Securities, Unrealized Gains	1,561	1,239
Available-for-sale Securities, Unrealized Losses		(1)
Available-for-sale Securities, Fair Value	118,953	118,789
Obligations of States and Political Subdivisions [Member]
Available-for-sale Securities, Amortized Cost	213,053	213,129
Available-for-sale Securities, Unrealized Gains	10,072	4,985
Available-for-sale Securities, Unrealized Losses	(227)	(1,388)
Available-for-sale Securities, Fair Value	222,898	216,726
Held-to-maturity Securities, Amortized Cost	1,945	2,370
Held-to-maturity Securities, Unrealized Gains	3	5
Held-to-maturity Securities, Unrealized Losses
Held-to-maturity Securities, Fair Value	1,948	2,375
Residential Mortgage-Backed Securities and Collateralized Mortgage Obligations [Member]
Available-for-sale Securities, Amortized Cost	2,782,517	2,543,974
Available-for-sale Securities, Unrealized Gains	54,657	57,506
Available-for-sale Securities, Unrealized Losses	(3,745)	(19,976)
Available-for-sale Securities, Fair Value	2,833,429	2,581,504
Held-to-maturity Securities, Amortized Cost	3,608	2,392
Held-to-maturity Securities, Unrealized Gains	202	216
Held-to-maturity Securities, Unrealized Losses	(25)	(209)
Held-to-maturity Securities, Fair Value	3,785	2,399
Other Debt Securities [Member]
Available-for-sale Securities, Amortized Cost	152	152
Available-for-sale Securities, Unrealized Gains
Available-for-sale Securities, Unrealized Losses	(2)
Available-for-sale Securities, Fair Value	150	152
Investments in Mutual Funds and Other Equity Securities [Member]
Available-for-sale Securities, Amortized Cost	1,959	1,959
Available-for-sale Securities, Unrealized Gains	71	50
Available-for-sale Securities, Fair Value	$ 2,030	$ 2,009

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Non-covered Loans and Leases (Schedule of Major Types of Non-covered Loans) (Details) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Non-covered Loans and Leases
Commercial real estate, Term & multifamily	$ 3,532,134,000	$ 3,483,475,000
Commercial real estate, Construction & development	184,707,000	247,814,000
Commercial real estate, Residential development	112,657,000	147,813,000
Commercial, Term	572,402,000	509,453,000
Commercial, LOC & other	788,268,000	747,419,000
Residential, Mortgage	245,034,000	222,416,000
Residential, Home equity loans & lines	277,453,000	278,585,000
Consumer & other	34,584,000	33,043,000
Total	5,747,239,000	5,670,018,000
Deferred loan fees, net	(11,686,000)	(11,031,000)
Total loans and leases	5,735,553,000	5,658,987,000
Total loans pledged to secure borrowings	$ 3,500,000,000

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Derivatives (Tables)

6 Months Ended

Jun. 30, 2011

Derivatives

Summary of Types of Derivatives, Separately by Assets and Liabilities and Fair Value of Derivatives

Derivatives not designated as hedging instrument	Balance Sheet Location	Asset Derivatives				Liability Derivatives
		June 30, 2011		December 31, 2010		June 30, 2011		December 31, 2010
Interest rate lock commitments	Other assets/Other liabilities	$	319	$	306	$	91	$	170
Interest rate forward sales commitments	Other assets/Other liabilities		272		754		124		191
Interest rate swaps	Other assets/Other liabilities		1,388		-		1,303		-
Total		$	1,979	$	1,060	$	1,518	$	361

Summary of Types of Derivatives and Gains (Losses) Recorded

Derivatives not designated as hedging instrument	Income Statement Location	Three months ended June 30,				Six months ended June 30,
		2011		2010		2011		2010
Interest rate lock commitments	Mortgage banking revenue	$	(18)	$	1,040	$	92	$	1,207
Interest rate forward sales commitments	Mortgage banking revenue		(2,180)		(3,517)		(1,983)		(4,349)
Interest rate swaps	Other income		85		-		85		-
Total		$	(2,113)	$	(2,477)	$	(1,806)	$	(3,142)